Under high inflation, the EU will regulate growth expectations again

The euro group meeting was held in Brussels on the 11th. The meeting focused on the economic conditions, policy challenges, and how to cope with high inflation in the current euro zone. The Minister of Finance of the euro zone attending the meeting said that despite the current economic growth of Europe, suppressing inflation is still the primary task. The European Commission stated on the same day that it will recently reduce the expected economic growth expectations this year and increase inflation expectations.

EU will reduce economic growth expectations

The European Commission introduced the current economic situation to the Minister of Finance of the euro zone on the 11th. The European Commission stated that it will reduce the expectations of this year's economic growth and increase inflation expectations, but it said that there is no signs of decline in the European economy. The European Commission will announce the latest summer economic outlook report on the 14th.

The EU Council's executive vice chairman of Economic Affairs Valatus Dongbrovskis said that economic growth will be repaired for two years. He also warned that energy prices continued to be high, and it was gradually affecting other areas of the economy, and inflation became more ingrained and more common.

East Brovskis said that the EU economy has shown considerable toughness this year, but under the influence of many uncertainty and risk factors, economic expectations may still be adjusted downward, and the adjustment of downward adjustment next year may be greater.

The European Commission's responsible member of the economic affairs Paul Mantaloni said at a press conference that the European economy is currently in trouble. The Ukrainian crisis cracks down on economic confidence, pushes high inflation, and causes high uncertainty. He said that the risks facing the economy are increasing since Russia may cut off natural gas supply to Europe. The European Union plans to take a series of measures to reduce the inflation pressure caused by natural gas imports.

In May of this year, the European Commission has greatly reduced economic growth from the euro zone this year from 4%to 2.7%in February, and the expected economic growth expectations next year will be reduced from 2.7%to 2.3%.

Earlier, the International Monetary Fund (IMF) also warned that the Ukraine crisis may seriously drag the European economic growth.

In terms of fiscal policy, the euro group discussed the budget status of the euro zone and the direction of fiscal policy in 2023. The chairman of the euro group, Donoho, said that he will be committed to maintaining debt sustainability and long -term growth prospects and avoiding increased inflation pressure.

The Minister of Finance of the euro zone still emphasizes the importance of current response to inflation, and expresses its willingness to promote the adopt prudent fiscal policy, that is, to adopt further reduction of the scale of stimulus measures and conducting structural reforms.

The European Commission also called on member states, especially high -liability countries, shifted from a wide range of stimulus policies to more prudent policies, and adjust the policy at any time to adapt to the rapidly changing economic situation.

Economic decline is difficult to dispel

In June, the inflation rate in the euro zone reached a new high to 8.6%. This level of inflation is still far exceeding the expectations of the European Commission. The European Commission predicts that the inflation rates in the euro zone will be 6.1%and 2.7%, respectively.

In response to the level of high inflation, the European Central Bank plans to announce its first interest rate hike at the 11 years in the 11 years at a monetary policy conference on July 21. The European Central Bank announced in June that it will start the interest rate hike period. It plans to raise interest rates by 25 basis points in July and stop purchasing net assets from July 1.

Some economists worry that the European Central Bank's interest rate hike operation will drag down economic growth and increase the debt burden of some high -debt countries, especially under the background of continued rising energy prices in Europe.

Russia's current largest cross-border channel "Beixi-1", the current largest cross-border channel for natural gas to Europe, will enter the 10-day annual maintenance period and suspend gas transmission, which means that the European crisis in the Ukrainian crisis and the natural gas supply crisis on Russia It will worsen further.

Analysts of the Capital Market Company of the Empire Commercial Bank of Canada said that the market is most worried about whether the "Beixi-1" natural gas pipeline will be resumed and operated. Essence

SPI Asset Management Analyst Stephen Enies said that in the coming weeks, it will be extremely challenging for Europe and huge uncertainty will last until August.

However, for the debt risk facing Europe in the context of interest rate hikes, the head of the European stabilization mechanism and economist Claus Reaglin said on the 7th that the interest rate hike process of the European Central Bank will not trigger a new euro crisis, the euro The sustainability of the debt of the district member states will not be directly threatened. Taking the country with the highest proportion of domestic GDP (GDP) as an example, the euro zone public debt is the same. Most of its debt is a fixed interest rate with an average period of about 20 years. Therefore, its debt sustainability will not be seriously affected.

The exchange rate of the euro against the US dollar continues to fall

As the outside world is increasingly concerned, the energy crisis will cause the European economy to fall into decline, and the pace of interest rate hikes in the Federal Reserve is far from factors such as the European Central Bank. The euro exchange rate on the US dollar will continue to decline on the 11th, and the euro is close to the US dollar. On the same day, the exchange rate of the euro against the US dollar once fell to 1 euro exchange to $ 1.0051, the lowest since December 2002. As of the end of the New York Market, one euro was exchanged for $ 1.0065, which was lower than the $ 1.0178 of the previous trading day.

With the Fed's expectations of continuous interest rate hikes, the US dollar exchange rate has continued to strengthen in the near future. The US dollar index rose sharply on the 11th. The US dollar index that measures the US dollar to the six major currencies rose 0.95%on the same day, closing at 108.0220 at the end of the Hui market in New York, the highest level in the past 20 years. According to market expectations, in order to suppress inflation, the Fed will raise 75 basis points at a monetary policy meeting from July 26 to 27. Related data show that the market is expected to increase interest rates to 3.5%by March next year.

Roy said that the pace of interest rate hikes of the Federal Reserve is more aggressive than most other developed economies, and it is difficult for other developed economies to keep up with its pace.

A New York Fed's survey shows that American consumers are currently expected to rise further this year, but in the long run, the growth rate will slow down. At present, the latest inflation data released on the 13th will attract the attention of the outside world. Investigation of Reuters shows that the inflation rate in the United States is expected to reach 8.8%in June.

The analysis believes that the euro and the US dollar to achieve a parity exchange is only a matter of time. After the affordable exchange, the exchange rate of the euro against the US dollar may even continue to fall.

Analysts of the Dutch International Bank said that due to the difficulty of improving the European energy crisis, the tightening cycle of major central banks around the world will continue, and the euro exchange rate against the US dollar may even fall to $ 0.95 in July.

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