What it changes for you

The central bank, inflation, recession. It seems far away. Yet it reaches your home through four doors.

First door: your loan. Banks borrow too. When the central bank raises its rates, they pass it on.

Between summer two thousand twenty-two and autumn two thousand twenty-three, the European Central Bank raised its rates ten times in a row.

Say two hundred thousand euros borrowed over twenty-five years. At one per cent, the monthly payment is seven hundred and fifty-four euros.

At four per cent, one thousand and fifty-six euros. Three hundred euros more, every month, for the same house.

Over the term, interest goes from twenty-six thousand to more than one hundred and sixteen thousand euros. Over four times as much.

Your loan is at a fixed rate? It does not move. It is the next one that will cost more, or your children's.

Second door: your savings. The Livret A follows inflation, but late, and rarely all the way.

In two thousand twenty-two, prices rose five point two per cent on average. The Livret A paid two per cent at best.

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Ten thousand euros at two per cent, with five point two inflation. You have more euros, but they buy about three hundred euros less.

The passbook protects your capital, not your purchasing power. It is a cushion, not an investment to grow.

Third door: your job. In a recession, companies sell less and cut their costs.

The first hit are often short contracts, temp work, and frozen hiring.

Unemployment rises late, but it rises. And often at the same moment as markets fall.

That is why the emergency fund comes first. It is there precisely for the day everything falls at once.

Fourth door: your prices. Official inflation is an average, calculated on a standard basket.

But your basket is not the standard one. You drive more, you rent, you heat with oil, or none of these.

For the example, say energy rises twenty per cent, and everything else three.

If energy is twenty per cent of your spending, your inflation is six point four per cent.

If it is only eight, your inflation is four point three six. Same country, same prices, two inflations.

That is why the official number often seems wrong. It is not wrong: it is just not yours.

The big numbers decide nothing for you. But they shift the conditions in which you decide.

Four reflexes: a fixed rate when you borrow, a passbook for the cushion, a reserve for your job, and your own basket in mind.

Macroeconomics is not a topic for the TV news. It is the climate your money lives in.