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.
POTENTIAL SETBACK: Although Chinese chip designers and foundry firms already have US EDA software, they might be unable to update those programs under new US rules The US’ latest ban on advanced electronic design automation (EDA) software exports to China might hinder Chinese chip companies from accessing advanced semiconductor technology, as they attempt to upgrade to 3-nanometer processes in the next three to five years, market researcher TrendForce Corp (集邦科技) said yesterday. The US Department of Commerce’s Bureau of Industry and Security on Friday announced bans on EDA tools for gate-all-around field-effect transistors (GAAFET), a new-generation semiconductor technology that US chipmaker Intel Corp and Samsung Electronics Co from South Korea are adopting to make 4-nanometer and 3-nanometer chips. The bureau in a statement said that gate-all-around field-effect transistor
WIDENING THE FIELD: Human resources managers must drop prejudices regarding gender, appearance and age to find the best candidates, Micro Technology said The job market for Taiwan’s semiconductor industry remained tight this quarter, as hiring activity slowed from a record high last quarter, a survey released yesterday by online human resource firm 104 Job Bank (104人力銀行) showed. Ongoing labor shortages have prompted local semiconductor firms to recruit more women and foreigners in Taiwan and in Southeast Asia, the job bank said. The talent gap in the first quarter reached 35,000 people per month, a surge of 39.8 percent from the same period last year, as the contactless economy and digital transformation shore up demand for semiconductors, 104 Job Bank said in its annual report
POSITIVE CULTURE: Pursuing 12-inch wafers earlier than peers helped TSMC lead the industry, said a former executive, whose main regret was working for SMIC in China Corporate culture at Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is what made the chipmaker a leading player in the global industry, a former executive said in an interview with California’s Computer History Museum. “One of the really important reasons that TSMC succeeded” is the culture at the firm, where “if equipment went down at two o’clock in the morning, we just called an equipment engineer,” and the worker would not complain, said former TSMC joint chief operating officer Chiang Shan-yi (蔣尚義). “We didn’t really do anything special, anything great, but we didn’t make any major mistakes,” when compared with competitors, such
DISMAL OUTLOOK: A Citigroup analyst predicted firms face ‘the worst semiconductor downturn in at least a decade,’ due to inventory build and the potential of a recession Semiconductor stocks tumbled after Micron Technology Inc became the latest chipmaker to warn about slowing demand, triggering concern that the industry is heading into a painful downturn. In the US on Tuesday, the Philadelphia semiconductor index sank 4.6 percent, with all 30 members in the red, its biggest drop in about two months. In Asia, chip stocks from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to Samsung Electronics Co, SK Hynix Inc and Tokyo Electron Ltd slumped. Investors are growing increasingly skittish as the notoriously cyclical industry is hurtling toward a prolonged slump after years of widespread shortages that led to heavy
RSS