On the closing day of the World Economic Forum in Davos, Christine Lagarde (ECB) and Kristalina Georgieva (IMF) will provide an insight into the global economy today. In addition to the warnings of high inflation and a recession, there may be some bright spots as well.
For the chief economist Carsten Brzeski of ING Germany the intervention, at 11:00, will not have any surprises. “They will once again warn of a difficult time for the global economy. Europe is in a difficult situation and they will say that we have to deal with a recession.’ Brzeski thinks there will be room for “positive points” as well. “Just think of China’s reopening and low energy prices.”
ECB chief Lagarde said yesterday during a roundtable discussion at the WEF that inflation in Europe is still too high. “His message was clear; the ECB will continue to hike interest rates for a while, even though markets are already speculating that the hikes will end. But Lagarde and Klaas Knot (DNB, ed) said they are far from finished.’
It was surprising that Lagarde asked for the development of a Capital markets unionalthough according to Brzeski this is more an issue for politicians than for the head of the European Central Bank.
Investments
‘A Capital markets union it is a combination of a banking union and a capital markets union. This should facilitate cross-border banking and investment within the EU, for example by making it easier and faster to invest in start-ups,” says Brzeski.
“But I think Lagarde is better off talking about fighting inflation than one Capital markets union. The question is also what will happen if the ECB continues to raise interest rates. Is it still okay with more loans and more investments? Because money is getting more expensive.’
Source: BNR
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