ECB believes that the war will bring more inflation and more uncertainty

The European Central Bank (ECB) considers “premature” Evaluate the economic impact of the Russian invasion of Ukraine, but anticipates that there will be a rise in inflation, which will be specified in figures on March 10, and also more uncertainty.

However, the president of ECBChristine Lagarde, assured, during the meeting of finance ministers of the European Union (EU) in Paris focused on the effects of the invasion of Ukraine by Russia, that there will be no lack of liquidity and that payment systems will be guaranteed.

Lagarde acknowledged that “it is premature to assess the economic impact” of that invasion, although he advanced that the effect it is having on uncertainty and energy prices is already evident.

Regarding the latter, he noted that gas prices are now six times higher than they were a year ago and oil prices are 44% higher. The ECB will present a revision of its inflation forecasts on March 10.

Lagarde recalled that the institution she presides over has a double mandate, “price stability and financial stability” which will be the guide for the evaluations made of the new situation and the monetary policy actions, when asked about possible increases in interest rates this year.

At the moment, he said that answering that question at this time “it would be premature” and that before doing so the situation will be examined “in detail”.

“The ECB –repeated– closely monitors the assessment of the situation” and is willing to take action to “guarantee price stability” and “financial stability”.

By the European Commission (EC), the economic vice president, Valdis Dombrovskisadmitted that the situation of uncertainty generated by the war in Ukraine “is very large” and that can affect growth in the EU.

But he pointed out that “the economy will not be paralyzed” and noted that for this year in their latest forecasts they expected a progression of the Gross Domestic Product (GDP) of 4% and that much progress has been made in recovery.

“Activity and growth should continue although there will clearly be an impact on our economies”, pointed out Dombrovskis, who did not contemplate changes in the so-called escape clause of the Stability Pact, that is, the return from 2023 to the public deficit and debt rules that were suspended at the beginning of the COVID-19 crisis. 19.

The European commissioner also stated that, beyond those that have been announced, they are preparing “plans for more sanctions that will weigh on Russia and Belarus.”

Among those sanctions could be depriving Russia of access to the Swift platform, which is the one that allows international banking transactions, an issue on which until now there has been no unanimity among the 27 EU countries.