ECB under fire for not lowering crucial interest rates, as economists disapprove.
Economists have called out the European Central Bank (ECB) for not reducing key interest rates even though there's been a reduction in price pressure and a struggling economy. Silke Tober and Sebastian Dullien from the Hans Böckler Foundation's Institute for Macroeconomics and Business Cycle Research (IMK) stated, "The ECB should have responded to this major shift in the data by April at the latest." They also noted that ECB President Christine Lagarde often mentions that the ECB's actions are based on data.
At the ECB's meeting on April 11, they chose not to change their key interest rates for the fifth time in a row. In their statement, they mentioned that if the data suggests the target value of 2.0% will be achieved in the future, "it would be appropriate to loosen the current monetary policy tightening."
The IMK believed that Germany could have already reached the target value in March if VAT on natural gas and district heating hadn't been increased back to the standard rate of 19%. The increase reduced the inflation rate by 0.2 percentage points. Germany's inflation rate was 2.2% in April.
On the other hand, in the eurozone which the ECB is accountable for, inflation sat at 2.4% in April. Food prices experienced a rapid increase compared to the previous month, while energy prices weren't as significantly reduced. The eurozone's inflation was also slightly higher than the Federal Statistical Office's figure per the EU's uniform calculation method in Germany (2.4%).
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Despite the interest rate cuts being a common response to price pressure and a struggling economy, the ECB has faced criticism for not lowering crucial interest rates, as economists disapprove. The ECB's decision not to change their key interest rates at their meeting on April 11, despite the suggestion from economists, has been met with further criticism.
Source: www.ntv.de
