The euro zone is unlikely to register a new consumption boom as savings accumulated during the COVID-19 pandemic are mostly held by wealthy households, two economists at the European Central Bank said in a Reuters blog post.

The study’s findings could support the ECB’s view that inflation will continue to fall slightly to its 2% target and give new arguments to those who want to keep interest rates unchanged after an unprecedented series of hikes that have driven up borrowing costs. in the euro zone at a historical maximum, reports Agerpres

The ECB found that the top 20% of households with the highest incomes have 49.3% of excess savings made between 2020 and 2022, with households in the next quintile coming in second with 19.8% of money saved. Since the wealthy are less likely to spend their savings, this means that these savings will not be used in the near future.

The authors of the blog post found that some of these additional savings were invested in financial assets such as stocks and bonds, as well as real estate, making them difficult to access.

“Those who hoped that money saved during the pandemic would support a consumption boom in the near term may be disappointed. This is very relevant when it comes to analyzing the drivers of inflation and how monetary policy should respond.” say study authors Niccolò Battistini and Johannes Gareis.

At its latest monetary policy meeting last week, the euro’s guardians left the key interest rate unchanged at a historic 4%. Investors expect the ECB to start cutting interest rates in the spring of 2024 as inflation falls and the economy stagnates or may even contract.