Elena Moreno |
Madrid (EFE).- The latest decisions of the European Central Bank (ECB) and the US Federal Reserve (Fed) reflect, according to experts, the divergences of both institutions in what they interpret as the final stretch of the hardening of their policies money to tame inflation.
The ECB executed its fifth rate hike (half a point) in six months this Thursday to place them at 3%, while the Federal Reserve did the same the day before, but opted for a softer increase, a quarter of a point, until taking them to a range between 4.5 and 4.75%, its highest level since September 2007 and the eighth consecutive rise.
The objective of both central banks is the same: to reduce their high inflation to 2%. In the case of the euro area, year-on-year inflation this January stood at 8.5%, according to advance data, and in the United States, at 6.5% at the end of the year.
There is a “clear message that the monetary restriction continues, although it may be a little less harsh than the previous one,” Alfredo Jiménez, from the Spanish Institute of Analysts, explained in a commentary.
However, the president of the ECB, Christine Lagarde, specified yesterday during her press conference in Frankfurt (Germany) that the institution’s Governing Council intends to raise another half a percentage point in March, while hinting at new increases in the coming months.
For Ben Laidler, from the multi-asset investment platform eToro, “the ECB is clearly aiming for a new rise of 0.50 points in March, which sets it apart from other central banks in the world, which are slowing down their battle against inflation.” .
The European institution began raising rates later than the Fed and has done so to a lesser extent, in addition to the fact that average inflation in the euro area is higher than that of the United States and its “economy is surprisingly resilient,” added the expert.
He also explains in a note to investors that European economic growth has in its favor the decline in natural gas prices, public spending and the growth of exports, in addition to benefiting from the economic reopening of China.
Laidler, who says that this firm position has made “the ECB the new sheriff in town”, considers that the institution led by Lagarde is on the path of a 50 basis point rise in the March and May meetings, before reaching a maximum at the end of the year.
The US Federal Reserve seems to be in a position that can be glimpsed as less aggressive than that of the ECB, which this Wednesday decided to move away from previous increases of 75 and 50 points, and opt for the quarter point, now that inflation is starting to show signal cooling.
In the opinion of Christian Scherrmann, economist at the asset management company DWS, the Fed opted for a moderate increase to give time and see the effect of previous aggressive increases.
“It is normally considered that rate hikes need between three and four quarters to fully show their effect on the economy,” said the expert, who indicated that this option gains positions in the Fed.
The explanation is that “labor markets continue to show notable resilience nine months after the start of this rate hike cycle and could imply a ‘wait and see’ attitude shortly.”
The president of the Federal Reserve, Jerome Powell, referred precisely in his press conference on Wednesday that in the US there is an “extremely tight labor market” that “continues to be unbalanced.”
He added that inflation remains in a very high range and that this justifies maintaining a restrictive monetary policy for some time, while hinting at a “possible end of the cycle of increases by reaffirming December’s prospects for a terminal rate somewhat above the 5%”, estimated the DWS expert.
For Laura Frost, Director of Investments at the fund manager M&G Public Fixed Income Team, “it is clear that the Fed is focused on inflation, but it is the most moderate decision we have seen since 2029-2019.”
The movements of the ECB and the Fed have been followed by that of the Bank of England, which yesterday also increased its interest rates by half a point, leaving it at 4%.