Inflation: are higher interest rates the solution?
The US Federal Reserve's latest interest rate hike of 0.75 percentage points has triggered a mixed response. While some praise the crackdown on inflation, others fear a recession. Commentators discuss the complex problems Europe's economy faces and bemoan a lack of perspectives for consumers.
Controlling inflation is a tall order
The global trend towards higher interest rates could stifle economic growth, writes Die Zeit:
“Ninety central banks worldwide have already raised their interest rates this year. ... Although each institution makes its decision based on the situation in its own country, the cumulative international reversal of the low interest rate policy of the past decade could unintentionally amplify the impact of interest rate hikes. And it could send the global economy into a deeper trough than the central banks intended. After all, their goal was to slow down the economy without smothering it entirely. But central bankers rarely manage this balancing act, even under much better conditions.”
Avoid business relocations
The inflation goes hand in hand with an economic crisis, warns Corriere del Ticino:
“As if the problem of financing inflation wasn't enough, rising energy prices and the threat of rationing, which seems increasingly likely - especially in Germany and Italy - are causing the interruption of certain production activities and prompting some companies to consider closing down for good or relocating to countries less affected by the crisis. So Europe must not only overcome the looming financial crisis but also avoid the downsizing of its industrial structure. In short, a decisive game will play out this winter: we will be confronted with a financial crisis and an economic crisis simultaneously.”
Nothing being done about high prices
Efimerida ton Syntakton is annoyed that citizens are just being fobbed off with one-off payments and heating cost subsidies:
“On the one hand the EU governments - and above all the Mitsotakis government - refuse to put a firm stop to the speculation with basic social goods that is developing under the pretext of the war in Ukraine, part of which is revealed in the unexpectedly high profits of the energy giants. On the other hand they refuse to relieve citizens with reductions on VAT and special taxes on essential goods. ... But this is a recipe for perpetuating the high prices. And for some people at the bottom of the social pyramid it could mean extreme food deprivation.”