The European Central Bank (ECB) would not be rushed into withdrawing monetary stimulus as officials act to contain inflation running at almost four times their 2 percent target, ECB President Christine Lagarde said.
“I don’t think that we’re in a situation of surging demand at the moment,” she told Francine Lacqua on Bloomberg Television from the World Economic Forum in Davos, Switzerland, yesterday.
“It’s definitely an inflation that is fueled by the supply side of the economy. In that situation, we have to move in the right direction, obviously, but we don’t have to rush and we don’t have to panic,” she said.
Photo: AP
Lagarde spoke a day after laying out her vision for the central bank’s next steps in a blog post.
The ECB is likely to exit negative monetary policy by the end of the third quarter, with a first interest-rate increase set for July, she said.
That prospective timetable signaling two quarter-point interest-rate hikes in the third quarter has irked some colleagues, because it would effectively exclude moving with a half-point increment, according to people familiar with the matter.
Some officials, including Bank of France Governor Francois Villeroy de Galhau, have also suggested that the ECB might end the year with positive interest rates. Traders are wagering on four 25-basis-point hikes by the ECB by the end of this year.
“When you’re out of negative, you can be at zero, you can be slightly above zero,” Lagarde said. “This is something we will determine on the basis of our projections, on the basis of our forward guidance.”
Lagarde refused to be drawn on whether the central bank might consider a 50 basis-point move.
Policymakers are walking a fine line as Russia’s invasion of Ukraine sent prices surging while denting confidence among businesses and households. New COVID-19 restrictions in China are putting additional strains on supply chains.
However, the ECB president downplayed the risk of an economic contraction, saying “for the moment, we are not seeing a recession in the euro area.”
She cited unemployment “at rock-bottom rates,” large household savings and the prospect for a strong summer for the tourism industry as forces that would offset negative shocks from the war and record inflation.
GROWING OWINGS: While Luxembourg and China swapped the top three spots, the US continued to be the largest exposure for Taiwan for the 41st consecutive quarter The US remained the largest debtor nation to Taiwan’s banking sector for the 41st consecutive quarter at the end of September, after local banks’ exposure to the US market rose more than 2 percent from three months earlier, the central bank said. Exposure to the US increased to US$198.896 billion, up US$4.026 billion, or 2.07 percent, from US$194.87 billion in the previous quarter, data released by the central bank showed on Friday. Of the increase, about US$1.4 billion came from banks’ investments in securitized products and interbank loans in the US, while another US$2.6 billion stemmed from trust assets, including mutual funds,
Micron Memory Taiwan Co (台灣美光), a subsidiary of US memorychip maker Micron Technology Inc, has been granted a NT$4.7 billion (US$149.5 million) subsidy under the Ministry of Economic Affairs A+ Corporate Innovation and R&D Enhancement program, the ministry said yesterday. The US memorychip maker’s program aims to back the development of high-performance and high-bandwidth memory chips with a total budget of NT$11.75 billion, the ministry said. Aside from the government funding, Micron is to inject the remaining investment of NT$7.06 billion as the company applied to participate the government’s Global Innovation Partnership Program to deepen technology cooperation, a ministry official told the
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s leading advanced chipmaker, officially began volume production of its 2-nanometer chips in the fourth quarter of this year, according to a recent update on the company’s Web site. The low-key announcement confirms that TSMC, the go-to chipmaker for artificial intelligence (AI) hardware providers Nvidia Corp and iPhone maker Apple Inc, met its original roadmap for the next-generation technology. Production is currently centered at Fab 22 in Kaohsiung, utilizing the company’s first-generation nanosheet transistor technology. The new architecture achieves “full-node strides in performance and power consumption,” TSMC said. The company described the 2nm process as
Even as the US is embarked on a bitter rivalry with China over the deployment of artificial intelligence (AI), Chinese technology is quietly making inroads into the US market. Despite considerable geopolitical tensions, Chinese open-source AI models are winning over a growing number of programmers and companies in the US. These are different from the closed generative AI models that have become household names — ChatGPT-maker OpenAI or Google’s Gemini — whose inner workings are fiercely protected. In contrast, “open” models offered by many Chinese rivals, from Alibaba (阿里巴巴) to DeepSeek (深度求索), allow programmers to customize parts of the software to suit their
RSS