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ECB: China's Lifting Restrictions Will Boost Inflation

 
 
 
 
European Central Bank
 

The reactivation of supply chains could help ease inflationary pressures in Europe, but there are worries that China's increased energy usage may cause additional inflationary pressures.

 

"China's decision to reopen its economy will boost inflation in Europe as the two compete for more energy" European Central Bank (ECB) President Christine Lagarde said.

 

The reopening of China is "something that will be positive for China mainly, and also for the rest of the world, but for us it will be an inflationary pressure, simply because the level of energy consumed by China in the last year was certainly less than what they would have consumed this year without the restrictions. The amount of LNG ( liquefied natural gas) that they will buy from the rest of the world will be higher than what we have seen and there is not that much spare capacity in terms of oil and gas," Lagarde said in Davos.

 

The International Energy Agency has warned that European companies could face higher costs when looking to buy natural gas this year because there will be more competition for the commodity. Inflation has been one of the biggest challenges for European citizens over the past year, largely thanks to higher energy bills as a result of the mutual embargo imposed by Russia.

 

The ECB raised interest rates four times during 2022, bringing its deposit rate to 2%. The central bank said in December that it would increase interest rates as early as 2023 to deal with rising inflation. The latest data did show some slowdown in inflation, even if it remains well above the ECB's 2% target. Inflation in December reached 9.2% in the Eurozone, this was the second consecutive monthly decrease in price increases throughout the Eurozone.

 
 
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Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.

 
 
 
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Disclaimer: The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.

Please note that no offer or solicitation to buy or sell securities, securities derivatives of future products of any kind, or any type of trading or invesment advise, recommendation or strategy, is made, given or endorsed by StocksRunner including any of their affiliates ("TS").

This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.