On Friday, Klaas Knot, a member of the European Central Bank (ECB) Governing Council, expressed support for the current monetary policy during a panel discussion in Slovakia. The policy aims to guide inflation back to the 2% target amidst geopolitical disruptions that could potentially lead to economic fragmentation and necessitate further countermeasures against negative supply shocks.
Knot confirmed that the ECB has effectively managed inflation despite these challenges. His endorsement comes as the ECB’s unprecedented tightening campaign, marked by a 10th consecutive deposit rate increase to 4%, appears to have concluded.
However, the conclusion of this tightening campaign coincides with climbing borrowing costs and rising government bond yields. These factors are intensifying economic headwinds and putting pressure on borrowers. Despite these conditions, officials predict a soft landing for the economies of the 20-nation eurozone.
Backing this outlook, Slovenian Central Bank Governor Bostjan Vasle stated that although growth rates are declining, overall sentiment remains well within the positive domain. This perspective supports the positive outlook for the eurozone economies, suggesting that the region is equipped to navigate potential future economic shocks.
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