2024-04-14 19:53:16
According to the economist, the economy is currently being artificially suppressed in order to slow down inflation even more. It is said that there are indicators showing that prices in certain sectors may still rise.
For example, the price of goods in Lithuania is 2.5 percent. lower than a year ago. At that time, services were even 6 percent. exceeds the prices that existed before the corresponding period.
“The situation is similar in the euro zone. Energy resources are cheaper, due to cheaper raw materials, many goods are also inexpensive or even cheaper, but services are still becoming more expensive,” N. Mačiulis reviewed the situation.
This is observed due to the fact that service prices are indexed annually, taking into account last year’s inflation,
“It is precisely this scenario that the ECB is afraid of, that with labor costs rising rapidly, that price indexation could turn into a bit too much inflation again.” For the time being, one of the main reasons why it is not possible to take a full breath is the faster-than-usual increase in wages,” the economist explained.
“It’s probably a macabre, obscure position for a lot of people, because they’d say that rising wages after we’ve seen this kind of inflation is a good thing.” Indeed, as a result, the purchasing power of the population increases, but in this situation the ECB’s goal is only one – to ensure that the rapid wage growth does not turn into excessive inflation in the future”, added N. Mačiulis.
However, this is not bad news for residents and businesses. It is said that, if it is possible to avoid negative surprises, the door to lowering interest rates could open in June. It is predicted that interest rates would be reduced at least 4 times this year.
“The markets currently expect that it will decrease by approximately 75 basis points and EURIBOR will reach around 3.2% at the end of the year,” the economist stated.
It is added that the decline of EURIBOR is already noticeable, and in the middle of the year, it is likely to decrease to 3.5 percent. Therefore, the interest rates at that time should be 0.5 percent lower, compared to last year.
2024-04-14 19:53:16