European Central Bank (ECB) President Christine Lagarde said the euro zone’s first rate hike in more than a decade could start in July, but she downplayed a two-yard rate hike in her remarks amid pressure on European growth (50 basis points).
As the world’s major central banks raise interest rates one after another, more and more members of the ECB have expressed their support for raising interest rates in the summer. In response to this urgent issue, Lagarde said in an interview with Dutch TV on Friday (20th) that the timing of interest rate hikes may be Comes “within a few weeks” after the end of the asset acquisition program at the beginning of the third quarter, in line with ECB guidance.
“We’re going to follow the trajectory of the end of the asset acquisition program,” she said. “And at some point after that — maybe a few weeks — we’re going to start raising rates.”
Inflation in the euro area is now almost four times the central bank’s 2% target, yet the ECB still has a negative interest rate policy and the deposit rate remains at -0.5%.
A growing number of ECB officials are shifting their focus from concerns over the Russian-Ukrainian war and supply chain shocks to combating prices. Dutch central bank governor Klaas Knot even called for a 2-yard rate hike in July this week, knocking on the door of an aggressive monetary tightening debate.
But Lagarde does not seem inclined to raise rates significantly, saying that while she shares Knot’s support for the broad direction of austerity, she stressed that Europe’s economic growth should not be put at risk. The car in the middle suddenly hit the brakes.”
Among the ECB voting members, Knot is in the hawkish camp. A more dovish ECB member, Ignazio Visco, said on Friday that July may be the right time to raise interest rates for the first time.
