Interest rates are rising due to high inflation. At the end of September, key interest rates could move out of negative territory.
The European Central Bank (ECB) is heading for the first rate hike in many years. An end to the net purchases of securities is to be expected “very early” in the third quarter, wrote ECB President Christine Lagarde in an article on the central bank’s website.
This would allow for a first interest rate hike in July, the Frenchwoman continued. From today’s perspective, key interest rates could then leave negative territory at the end of the third quarter.
The central bank’s deposit rate, which applies to bank deposits with the central bank, is currently minus 0.5 percent. The main refinancing interest rate, which for a long time was considered the key interest rate but has been overshadowed by the deposit rate in recent years, is on the zero line.
Lagarde: “Gradual further normalization of interest rates”
Lagarde justified the prospect of rising interest rates primarily with high inflation. This recently rose to a record high of 7.4 percent in the euro area. Further interest rate hikes depended on the inflation outlook: If inflation stabilizes at two percent in the medium term, a gradual further interest rate normalization would be appropriate, explained Lagarde. “However, the pace and overall extent of the adjustment cannot be determined in advance.”
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
