The ECB raised interest rates for the second time this year to 2.5%, with the market expecting them to stabilize at 3.25% by June next year. Citizens should prepare their household budgets for an increase in housing credit costs and the cost of living in general. Inflation is expected to continue rising, influenced by conflicts in Europe and the Middle East that affect energy prices.
With inflation at 3.3% and an upward trend, and entering the wage negotiation phase, it will be difficult to avoid increased social tension, despite the ECB's efforts to anchor cost increase expectations at 2.7%. The major dilemma for central banks relates to the duration of the conflicts and the shock to oil products, since the longer it lasts, the greater the likelihood of transmission to other sectors of the economy.
Gas prices in Europe have already risen 170% since the beginning of the Middle East conflict, going from 30 euros/MWh to 82 euros, with prospects of exceeding 100 euros and reaching 150 euros in a harsh winter. In the worst-case scenario, gas prices could quintuple, with incalculable consequences for businesses and the most vulnerable families.
Deposits and savings certificates do not keep pace with rising inflation, which harms 80% of national GDP that is held in these products. The article concludes that the only way to survive this uncertainty is to invest in capital markets, criticizing deputies who argue that investing is a casino, and reiterating the ECB's call for Europeans to invest in companies instead of leaving money idle in banks.
