The European Central Bank decided yesterday to lower interest rates by 0.25 points, to 4.25%, as required given the undeniable progress in controlling inflation after two years of drastic tightening of its monetary policy. The expected measure means … a respite for the Eurozone economy, which has paid with anemic activity from which the shock therapy applied to contain runaway prices as a result of the war in Ukraine is finally beginning to recover, albeit timidly. The ECB cooled, however, the expectations of a sudden change in trend in its actions by conditioning future cuts to the progress of the CPI – 2.6% in the Eurozone – about which it warned of tensions that push upwards, basically due to salary increases after a long period of loss of purchasing power. In fact, it has raised its forecasts for this indicator, which suggests that it will exercise extreme caution in its short-term movements.
It is not ruled out, therefore, that in September the entity chaired by Christine Lagarde will leave things as they are. Above all, if the United States maintains rates. Yesterday’s reduction will take a while to reach the real economy. And its social advantages will be limited. Although price control is the ECB’s first mandate, European stability requires not forgetting growth. “The economy is a state of mind,” declared José Luis Rodríguez Zapatero in 2009. That mood must have been stimulated yesterday since no family and no company could receive the modest reduction in money prices other than as a relief. A sign that the current situation in the EU is reasonably good. At a time when every institutional decision is judged for its alleged electoral intention or possible effects on Sunday’s elections, it is presumed that the reduction will serve to reconcile citizens with the Union authorities. Especially since the measure cannot be answered head-on by any party.
The ECB has thus avoided disappointing the Europe most in need of support. His decision is fully justified for economic reasons and represents a certain balm for an EU whose governance may be seriously hampered after the 9J scrutiny due to possible changes in the traditional balances between conservatives, liberals and social democrats.
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