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This Monday, the European Central Bank opens its annual forum in Sintra, southern Portugal, where central bankers and economists must discuss how best to deal with the return of inflation. European Central Bank President Christine Lagarde will speak there on Tuesday. He will be joined in Sintra by Federal Reserve Chairman Jerome Powell and Bank of England Governor Andrew Bailey.
In May, inflation in the euro area reached more than 8%. record level since the establishment of the single currency. Inflation, which was reinforced by the war in Ukraine, is expected to continue. This is why the letter Christine LagardeParticularly expected. To fight inflation, the European Central Bank is preparing in July to raise interest rates for the first time in eleven years.
This possibility has increased the risk of a debt crisis in the eurozone, with the growing interest rate differentials between northern and southern European countries. In December 2021, the difference between German and Italian prices was 0.9 points. Today it is 2.4 pips.
Markets are worried about the breakup of the monetary union. To reassure investors, the European Central Bank announced the creation of an anti-retail instrument, the aim of which will be to soften the rate differentials between countries benefiting from good borrowing conditions and others.
►To read: The Federal Reserve and the European Central Bank maneuver against inflation
