Andrea Orcel, CEO of UniCredit, speaks from Davos, on the occasion of the World Economic Forum, about the ECB and rates.
Speaking to the microphones of CNBC, the CEO of Piazza Gae Aulenti acknowledged that the ECB has embarked on “a very difficult job”, which sees it forced to try to defeat the flare of inflation with interest rate hikes, which however, they risk destroying the growth of the GDP of the euro area.
Commenting on the nature of inflation in the Eurozone, Andrea Orcel noted that “Europe is grappling with a different kind of inflation than the United States.”
Inflation is, in fact, underlined the CEO of UniCredit, “primarily triggered” by the dynamics affecting “the supply of energy and foodstuffs”.
“Consequently – added the banker – what the ECB is trying to do to deal with inflation is to bring down the rest of the demand, but obviously this has a disproportionate impact, let’s call it that, on the economy, beyond these commodities”.
Orcel added that given that it takes some time for rate hikes to take effect on the economy, and considering everything else, “we were concerned that a sizeable hike above 2%
could have unfolded undesirable effects ahead of time”.
That said, according to Orcel, the latest data suggests that the euro area economy may be able to dodge a recession.
Our “scenario was for a mild recession this year, but since then, if we look at all the indicators, we see upside risks, so we’re looking at something that could also be a no-recession scenario,” he said. ‘CEO of UniCredit, speaking from Davos, where the World Economic Forum (WEF) is taking place.