For the second time in a row, the European Central Bank left its key rates unchanged this Thursday, December 14. After 10 increases in a row, this is a sign that the institution judges that the fight against inflation is finally bearing fruit. In November, prices in the Eurozone increased by 2.4%.
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These figures are far from the peak of October 2022: at the time inflation exceeded 10%, a consequence of Russia’s invasion of Ukraine and the brutal rise in energy prices in a post- pandemic of high public spending already conducive to overheating.
Of the two sides of the AtlanticCentral Banks have played their role: between March 2022 and September 2023, the European Central Bank increased its key rates 10 times, and the American Federal Bank (Fed), 11 times.
After the fever, the status quo has reigned since September and if the trend continues, we should see rates fall again in the coming months. Inflation therefore seems under control but at what cost ?
Unemployment has not exploded over this period: in the euro zone it is still between 6 and 7%, around 4% in the United States, returning to pre-pandemic levels. But for how long ? Rates are no longer increasing, but borrowing is still much more expensive than 20 months ago: in real estate and construction, the slowdown is notable and will likely be lasting.
All sectors of the economy that need new money to invest are waiting, growth remains sluggish and recession threatens. Inflation is falling but there is no reason to worry.
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