2024-07-04 09:19:06
The European Central Bank (ECB) is concerned about the influx of tourists due to major sporting and cultural events. This is reported by the Financial Times (FT), Day.Az reports with reference to Lenta.ru.
It is noted that the European Football Championship, Taylor Swift concerts and the Olympic Games in Paris may influence the acceleration of prices in the EU. The regulator accused people creating excitement around such events of significantly increasing the cost of goods and services. Thus, the cost of accommodation in Portuguese hotels increased by 20 percent in a month, which led to an increase in inflation in the sector by 14 percent. German hotels are doubling their prices for accommodation during the football championship, and local bars and restaurants have reserved all their seats several months before the start of the tournament.
In June, the ECB cut its key rate to 3.75 percent for the first time in almost five years. This happened after inflation in the eurozone fell to 2.6 percent (the target is 2 percent). However, inflation in the services sector remains high – in May it rose to a record 4.1 percent since October 2023. Goldman Sachs analysts suggest that a further increase in inflation could push the regulator to lower interest rates even more slowly.
ECB Executive Board member Isabel Schnabel warned that the ECB should be patient before cutting borrowing costs. Adjusting monetary policy and cutting borrowing costs is not advisable in the near term due to high service inflation, weakening financial conditions and tensions in the Red Sea, which are raising concerns about supply chain disruptions. “We need to be patient and cautious, as we know from historical experience that inflation could flare up again,” she explained.
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