While forecasts predict Spanish economic growth of 1.5%, inflation and prices are not slowing down, nor are interest rates. How long and for how much?
How much more will interest rates rise, and how long will these central banks' anti-inflationary measures continue? This is the million dollar question that few dare to answer.
According to the well-known center of social and economic analytics Funcas, banks will continue to raise rates and will reach 4% in 2023, to hit the ceiling and in 2024 begin to be placed already below a hypothetical 3.5% or even much lower at the end of next year.
Thus, although the main benchmark for mortgage loans, the Euribor, rises momentarily, mortgages will start to become cheaper in a very short time. The outlook is optimistic, as are the estimates for the Spanish economy, which are also flattering.
We are going to grow more than we expected, as Funcas states that our economy will grow in Spain up to 1.5%, improving the forecasts known to date. However, prices, especially for food and raw materials, have no intention of slowing down and are also correcting existing forecasts.
Inflation forecasts for 2023 are revised upwards. The average Consumer Price Index (CPI) is expected to reach 4.2% and the Gross Domestic Product (GDP) to climb two tenths more to 1.5%. And it will be, analysts say, mainly thanks to the pull of foreign demand.
Precisely in the international arena, neither the collapse of the US Silicon Valley Bank, nor the news about Credit Suisse have had a major impact on the financial sector. Both entities have many ingredients that have caused their particular situation, but far from any kind of 'contagion', 'domino effect' or of course similarities with the rest of healthy, reliable and stable banking entities. Especially after the famous and dreaded crisis of 2008 and the junk mortgages, of which we have all been reminded these weeks by some headlines.
The FED has raised interest rates for the ninth consecutive time, and did not mind the turbulence created in the banking sector by the news from Credit Suisse and Silicon Valley Bank. A further 0.25% after several unprecedented hikes and the withdrawal of the fiscal stimuli deployed by the US government to save the crisis caused by the covid pandemic. These are historic measures that we do not know when they will have the desired effects or when their objectives will materialize.
Meanwhile, the European Central Bank (ECB) says that it is "non-negotiable" to control and lower inflation in the euro zone, but that this will be done "in an orderly fashion" and that it is not committed to continue raising interest rates as the main measure to control prices.
So, what is the roadmap the EU has in mind in financial matters? New challenges almost every month and very volatile contexts and uncertainties. Thus, the European Union and the ECB must seek and implement new solutions and formulas that 'toreen' the new landscape of international financial turbulence. Christine Lagarde, the president of the ECB, has once again insisted on the priority of lowering prices and bringing inflation down to 2%, although, given the changing context, she does not let us see that famous road map which may need to be changed at any time.
