The ECB: “Hard fight against inflation”. Stock exchanges fall, the spread runs again

For some time now, when central bankers have spoken, the markets have trembled, and it happened again today with the declarations of Christine Lagarde: European stock markets down and the spread between Italian BTPs and German Bunds jumping after the President of the ECB announced that the Monetary tightening will continue, and it doesn’t matter that I sweetened the pill with reassuring statements that the recession won’t happen.

«We are determined to fight inflation and bring it back to 2%. Everything we do, all the decisions we make, are totally geared towards that goal, to bring inflation back to 2%. Not only is it our mandate but it’s also the best thing we can do for the economy.” So said Lagarde in an interview with a Finnish TV. «More than a year ago we began the process of normalizing monetary policy and in the last six months we have raised rates by more than 300 basis points. At our last monetary policy meeting, we raised the cost of borrowing by another 50 basis points and clearly communicated our intention to do so again in March. What happens next will strictly depend on the data: we will look at the numbers, inflation, labor costs, projections and on the basis of these numbers we will determine what our next monetary policy path will be”.

The European stock exchanges reacted with a series of declines, albeit not traumatic: Milan -0.68%, Paris -0.37%, London -0.46%, Frankfurt -0.52% and Madrid -0.33% . The yield on the Italian 10-year BTP is up, reaching its highest level since 4 January: 4.472%. The spread also increased to 193 points against yesterday’s 187 points at the close.