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ECB president Lagarde: “will raise interest rates in July” – recession is not a baseline scenario despite the situation | news

Those: Sina Ettmer Photography / Shutterstock.com

European Central Bank (ECB) President Christine Lagarde has once again promised interest rate hikes in the near future. “We intend to raise key ECB interest rates by 25 basis points during our July monetary policy meeting,” Lagarde told the European Parliament’s Committee on Economic and Monetary Affairs on Monday. Another rate hike is likely to come in September. Monetary policy should therefore gradually normalize.

The central bank wants to contain very high inflation recently. In May, the annual inflation rate rose to 8.1%. The central bank is aiming for 2% over the medium term.

Lagarde also sought to allay fears that the announced anti-crisis tool could hinder the fight against inflation. “The decision to speed up work on an anti-fragmentation tool underlies the commitment to stabilize inflation at 2% over the medium term,” he said. If the fragmentation is excessive, the ECB’s monetary policy can no longer be effective. So this fight is part of the ECB’s mandate. Southern European bond yields have risen more sharply than Bunds in recent weeks.

At an extraordinary meeting on Wednesday, the ECB decided to speed up work on a new anti-crisis instrument. In order to ensure that the newly decided tightening of the ultra-accommodative monetary policy does not impose an undue burden on highly indebted euro countries, the ECB also wants to flexibly reinvest funds from maturing bonds of its purchase program. Crown PEPP emergency. Lagarde declined to comment on further details of the instrument in front of Parliament. However, the determination of the ECB should not be underestimated.

Lagarde does not expect a review: “The conditions for further growth are in place”. A recession is not part of the ECB baseline scenario. Wage growth has increased but remains moderate. However, it will increase as the year progresses and will remain above average thereafter. Mal also wants to counter a wage-price spiral as interest rates rise.

dpa-AFX

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