European Central Bank President Christine Lagarde reiterated on Monday that interest rates will remain high until inflation returns to the 2% target, even if the economy is going through a difficult period, Bloomberg reported, citing Agerpres.
“Our future decisions will ensure that the key ECB interest rates will be set at fairly restrictive levels for as long as necessary,” Christine Lagarde told members of the European Parliament’s economic and monetary affairs committee.
“We remain determined to ensure that inflation returns in an orderly manner to our medium-term objective of 2%,” Lagarde added, essentially echoing a statement issued by the ECB at the end of this month’s monetary policy meeting, when the euro’s guardians decided during the 10- th consecutive increase in the price of credit to a historical maximum of 4%.
Most economists and investors believe that the 4% level will be the peak of the interest rate hike cycle launched by the ECB a year ago to combat inflation.
Some members of the ECB’s governing council have expressed support for this view, such as Bank of Spain Governor Pablo Hernandez de Cos, who reiterated on Monday that the current level of interest rates should return inflation to the 2% target if maintained. for a fairly long period.
Is a period of stagflation ahead for the Eurozone?
In contrast, Bank of France Governor Francois Villerois de Gaulle said the ECB should not test the economy “until it breaks”, hinting that he would not want to raise interest rates any further.
Christine Lagarde also acknowledged the problems caused by the ECB’s actions, especially for the 30% of households that have variable rate mortgages.
“Our task is to systematically return inflation to the target. The sooner we achieve this, the more stable prices will be, and the less painful the future will be for both those who invest and those who borrow,” the ECB president assessed.
The European Central Bank (ECB) recently cut its growth forecasts for the euro zone over the next two years, but raised its inflation forecasts, indicating possible stagflation, a period when the economy suffers the double whammy of high inflation and modest inflation. growth.
Source: Hot News
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