Christine Lagarde, president of the European Central Bank, has radically changed her tune on a possible recession. The World Bank has warned that the aggressive monetary policy of global economies will lead to a recession in 2023. The multinationals also warn that the slowdown in demand has accelerated.
Christine Lagarde’s change of tone on the recession
In July, Christine Lagarde revealed that there was no forecast of a recession in 2022 or 2023. However, in a speech today before the Committee on Economic and Monetary Affairs of the European Parliament, she revealed that 2023 will be a difficult year for the economy. She estimates that the last quarter of 2022 and the first quarter of 2023 will likely be negative.
Julio Lagarde: There is no recession forecast this year or next
September Lagarde: OMFG pic.twitter.com/V7uMxkYaWp
—Sven Henrich (@NorthmanTrader) September 26, 2022
Two consecutive quarters of negative GDP growth meet the technical criteria for a recession. In fact, the United States has already met this technical criterion. The White House and the fed allayed recession fears by highlighting the strength of the labor market and wages. However, when the economic downturn begins to accelerate, the Fed will find it hard to ignore the possibility of economic catastrophe.
Like the Fed, Christine Lagarde seems firm in her stance against inflation. She reveals that he ECB will increase your interest rates at future meetings. He emphasizes that wage dynamics remain contained. However, the depreciation of the euro has caused an increase in inflation levels.
How does this affect cryptocurrencies?
The cryptocurrency market is highly correlated to the broader general market. As global economies engage in quantitative tightening, the stock market and crypto market will crash. Excessive aggressiveness can also push the economy into a recession.
the bitcoin it was created after the last big recession in 2008. The market will pay attention to how the cryptocurrency behaves during a recession.
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