Citing a sustained fall in inflation, the ECB said its deposit rate would be cut to 3.75% from a record high of 4%, putting it ahead of the US Federal Reserve and the Bank of England, which have yet to cut interest rates.
Very good sign
OH NO! We are all
/s
This is the best summary I could come up with:
The European Central Bank has eased the pressure on borrowers across the eurozone after cutting its main interest rate for the first time in almost five years.
Financial markets eagerly anticipated the first eurozone cut since September 2019, which will also affect the ECB’s main refinancing operations rate, which fell from 4.5% to 4.25%.
City analysts had forecast the cut in borrowing costs at the ECB’s June meeting after signals that the central bank was ready to offer more support to eurozone economies after a period of economic stagnation following the Russian invasion of Ukraine.
Dean Turner, the chief eurozone economist at UBS Global Wealth Management, said the outlook for inflation, as indicated by the ECB’s latest projections, point to further interest rate reductions later this year.
But with the disinflationary process firmly under way, the ECB, along with other central banks, should feel confident enough to ease policy, most likely at a pace of one cut per quarter.”
Mark Wall, the chief European economist at Deutsche Bank, said the higher than previously forecast inflation numbers would make ECB policymakers more circumspect about futures cuts.
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Inflation is caused by inflationary currency. Any other inflation caused by supply chain issues, corporate greed, lack of market competition, etc is just added on top of that. Fiat inflationary currency is a rather new invention in terms of the human timeline. They aim for 2-3% inflation in “good years”. Central banks are not to be trusted.
Think of it: in the last 50 years, everything has gotten cheaper to produce thanks to increasing mechanization, outsourcing to cheap labor/low regulation countries, and extremely efficient supply chains. Yet so many things “costs more” than it did 50 years ago. Even basics like bread. How is that the case? Shouldn’t it cost less? Where is that “extra efficiency” going if not to lower prices? The answer: bread is the same value it’s always been, the money has gotten less valuable. This is how they keep working class people running on a treadmill, never able to achieve economic mobility.
Inflationary currency devalues the currency you worked hard to earn by increasing the supply. It hits the middle class the worst because they have more of their net wealth in cash, often in the form of emergency funds, savings, and putting together enough money for a down payment on a home. Rich people have their money in assets which aren’t harmed by currency inflation. Poor people live hand to mouth. If you want to identify the causes of increasing wealth disparity, the inability of people to save money is a major one.
Thats some really hard BS.
How do you think is hit harder by Inflation: someone working for 50 k a year and negotiating a raise every other year or someone with 500 k on the bank?
Inflation hits the wealthy people the hardest! Not something I despise, but your claim is still complete BS.
So why do we aim for ‘close to, but below 2 %’ inflation (2nd BS claim: no one aims for 2–3 % inflation). Because it has shown to be the most efficient to reduce unemployment and force rich people and companies to actually invest. Without inflation companies would need to fire people a lot more, since they can’t lower their expenses for their workforce in a different way. And sometimes they are struggling with their productivity and can’t stay competitive in any other way. Lowering wages is not allowed in most countries.
It also forces rich people to invest. If there’s no inflation, I can just get rich and then do nothing. If the value of my money decreases 2 % each year, I need to actively participate in the economy, at least by lending my money to other companies so that they can invest in new things.
