The perilous interest rate curve
The impact of interest rates and the cost of money. A phenomenon that affects consumers' cost of living and businesses' willingness to invest. POWERTRAIN International discussed this in the November 2023 issue.
T
he European Central Bank has made its mind up: the austerity season is not over, rates are to be raised. One more time. We are up to 4.5% on main refinancing, 4% on deposits, 4.75% on marginal loans, effective 20 September 2023. After all, Christine Lagarde, President of the European Central Bank, Chair of the European Systemic Risk Board, Member of the Board of Directors at the Bank for International Settlements, was more than forthright on Wednesday 28 June at the Central Bank Forum in Sintra, Portugal: “We’re not considering breaks, we’ll stay in restrictive territory long enough.” On the same day, also in Sintra, the Bank of England Governor, Andrew Bailey, said: “We have a job to do. Our job is to return inflation to target and we will do what is necessary.” The Federal Reserve, for its own part, does not take inflation lightly either. Even the words of US Federal Reserve Chair Jerome Powell on 25 August leave no room for optimism: