In June-July, the ECB started buying the government bonds of the southern member countries. According to data published by the central bank on Tuesday, in June-July, the central bank's stock of German, French and Dutch government bonds decreased by a net amount of 18.9 billion euros (HUF 7,477 billion), while the net stock of Italian, Spanish, Portuguese and Greek bonds decreased by 17 increased by .3 billion (HUF 6,844 billion).
Barely a month has passed after the European Central Bank (ECB) raised interest rates after a decade, and the markets are pricing in further monetary tightening, a total of one more percentage point, Világgazdaság reported.
True, this is much less than previously expected, roughly half of what was expected at the end of July.
In the background are fears of recession and the ever-decreasing perception of gas supply.
The ECB tightened by 50 basis points in June, but since then more and more analysts expect the Eurozone economy to sink into recession this year. This significantly limits the willingness of central banks to raise interest rates.
Following the milder monetary stringency and the looming recession, there is selling pressure on the euro and government bonds denominated in it.
In addition to the struggles of the recession and the pressure to raise interest rates, the ECB also started implementing its "anti-fragmentation" program. The purpose of this is to prevent the yield of the government bonds of southern countries from rising too much as a result of the interest rate hikes, and to protect, for example, Italian government bonds from speculation.
According to data published by the central bank on Tuesday, in June-July, the central bank's stock of German, French and Dutch government bonds decreased by 18.9 billion euros, while the net stock of Italian, Spanish, Portuguese and Greek bonds increased by 17.3 billion.
Three categories were separated within the program. There are the donors: Germany, France – much to the chagrin of Paris – and the Netherlands, and there are the beneficiaries: among them the Italians, the Greeks, the Spanish and the Portuguese, as well as the so-called neutral countries.
In spite of the looming recession, the ECB continues to tighten its interest rate policy in order to break inflation, and this further raises the interest rate on mortgage loans. According to the forecasts, another 50 basis points could come in September (in principle there will be no interest rate meeting in August), in July the inflation of the common currency zone accelerated to 8.9 percent - a historical high in the euro zone. The rise in real estate prices also reached a historic high of 9.8 percent in the first quarter of this year.
Source and full article: hirado.hu
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