The ECB has raised interest rates a total of seven times since July 2022. So far, however, this is not enough.
ECB President Christine Lagarde has emphasized the determination of the euro currency guardians to further raise interest rates in the fight against persistently high inflation. “Inflation is too high today and is likely to remain so for too long,” said Lagarde today at the German Savings Banks Conference in Hanover.
“We are determined to bring them back to our medium-term target of two percent in a timely manner.” Lagarde emphasized: “You shouldn’t have any doubts about that.”
Continue boost cycle
After years of zero and negative interest rates, the ECB has hiked interest rates seven times in a row since July 2022 in the face of persistently high inflation. The key interest rate at which commercial banks can get fresh central bank money is now 3.75 percent. If banks park money at the ECB, they now receive 3.25 percent interest.
According to a first estimate by the statistics office Eurostat, the inflation rate in the euro zone was 6.1 percent in May after 7.0 percent in April. Lagarde confirmed that from the ECB’s point of view “there is still a lot to be done (…) to bring interest rates to a sufficiently restrictive level”: “We know that – despite our strong and rapid interest rate hikes – there is still a significant tightening of monetary policy pending.”
The ECB must “continue its cycle of hikes until we have enough confidence that inflation is on track to return to our target in a timely manner,” Lagarde said. The ECB Council’s next interest rate decision is scheduled for June 15th.
Source: Stern
