As previously announced, the European Central Bank raised interest rates by another 50 basis points (0.5%) bringing the rate on main refinancing to 3.50% , that on deposits to 3%, and that on marginal loans to 3.75% .
“Inflation should remain too high for too long a period of time. The Governing Council stands ready to intervene where necessary to preserve financial and price stability in the euro area», reads the press release, which does not refer to any next steps. While softening the tone : «The high level of uncertainty – continues the ECB statement – reinforces the importance of a data-dependent approach in interest rate decisions».
If, therefore, the Stock Exchanges suffer after the announcement , with Milan at -0.5% and the negative opening of Wall Street at -0.69%, considering an inflation forecast for 2025 now at 2.1%, a slowdown on upcoming rate hikes may be in the offing . Indeed, the ECB's objective is "to ensure the timely return of inflation to the 2% medium-term objective", where the "medium term" is, in fact, 2025.
"The euro area banking sector is endowed with good resilience , with solid capital and liquidity positions" and "in a much better situation than in 2008", then specified the ECB president Christine Lagarde . In any case, the central institution "has all the necessary tools to provide liquidity to support the euro area financial system , should the need arise, and to preserve the orderly transmission of monetary policy". the reassurance.
Critical of the rate increase, the second in a row, Foreign Minister Tajani , according to whom "the ECB is not moving in the right direction , even if today there was a start of rethinking". "In our opinion – continued Tajani – it is not a good way to deal with inflation".
MORTGAGES, WHAT'S CHANGING – The latest rate hike will lead to an inevitable increase in mortgage payments , especially variable ones, with a heavy impact on the average income of an Italian family , amounting to around 33,000 euros net per year. According to Mutuionline «if in February 2022 the 20-year mortgage payment accounted for 20% of monthly income, with the latest increase it will reach 30% of income . Even higher is the increase in the installment of the 30-year mortgage, which goes from 20 to 40% of the monthly income».
HOW TO DEFEND YOURSELF, THE SUBROGIES - One of the defense tools for those who have a mortgage and see their installment increase, is to choose the subrogation. And that is to switch to a more convenient fixed or variable rate. Under certain conditions, it is also possible to renegotiate the loan with your bank.
(Unioneonline/vl)
