A new interest rate hike and whoever endures... endures.
The ECB pressed the monetary tightening button once more, raising the deposit facility rate by 25 basis points to 2.5%.
The pretext is familiar: inflation persists, energy has caught fire, and soaring prices refuse to heed targets and forecasts.
Except there is one minor detail.
To tackle inflation fueled by expensive oil, the ECB makes money more expensive.
In other words, citizens first pay for expensive gasoline, then for expensive electricity, and are now called upon to pay higher loan installments as well.
And here begin the difficulties.
Because raising interest rates may strike inflation in theory, but in practice it directly hits those holding floating-rate mortgages, consumer loans, and business loans.
At the same time, depositors do not see a corresponding boost in their pockets.
In other words, the ECB raises the price of money, but fails to distribute the bill evenly. And the worst part?
Today's hike might not be the last.
Markets are already pricing in further moves, as the ECB sees inflation remaining above the 2% target for a longer period.
And the question is now straightforward:
How many times can the same citizen pay for the same crisis?
www.bankingnews.gr
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