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Interest rates will continue to rise, ECB warns

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The European Central Bank will continue to raise its rates “at a sustained pace” in order to combat inflation deemed too high within the euro zone.

The President of the European Central Bank Christine Lagarde reaffirmed on Monday the intention of the monetary institute to continue to raise its rates “at a sustained pace” to combat inflation still too high in the euro zone.

“The ECB’s interest rates will still have to increase significantly at a sustained pace to reach sufficiently restrictive levels” (i.e. penalizing for activity, editor’s note) and “stay there as long as necessary”, affirmed the central banker during a reception of the operator of the Frankfurt Stock Exchange.

In less than six months, the ECB has raised its key rates by 2.50 percentage pointsthe fastest rise in its history.

“We must reduce inflation” and “we will achieve this objective”, insisted Ms. Lagarde.

For now, inflation in Europe “is much too high”said Ms. Lagarde, as at the Davos forum last week.

This can be explained “in part because of our vulnerability to the evolution of the geopolitics of energy“, she explained.

Decoupling with Russia last year since the start of the war of invasion in Ukraine “has pushed energy inflation in the euro zone to extraordinary levels”, causing prices to rise overall to more than 10% in October.

While energy inflation has fallen recently, core inflation – excluding energy and food prices – continues to rise.

” Therefore, it is vital that inflation rates above the ECB’s 2% target do not take root in the economy”concluded Christine Lagarde.

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