The President of the European Central Bank, Christine Lagarde, assured this Monday that she was “aware” of the “pain and suffering” caused by the rise in interest rates, at the highest level ever in the euro zone, but urged price stability .
“Based on the current assessment, I believe that a substantial contribution has been made to returning inflation to the 2% target in a timely manner. Do we also take into account the pain this causes and the suffering that exists? Yes, we are aware of it, I can guarantee you”the leader of the European Central Bank (ECB) said during a regular hearing at the European Parliament’s Committee on Economic and Monetary Affairs in Brussels.
In response to a question from Socialist MEP Pedro Marques about the impact on households of successive increases in key interest rates in the eurozone, Christine Lagarde noted: “We know that, for example, 30% of households in the Member States have variable rate mortgages and that is difficult, we know that.”
“And we also know that the price of fuel, the price of gasoline at gas stations, the price of energy in general is also taking a heavy toll on low-income families, yes we know that. But we also know that our mission is to ensure that inflation returns to its targets in a timely manner.”the ECB president emphasized.
And he concluded: “The sooner we achieve this, the more stable prices will be and the less painful it will be for the future, both for those who invest and for those who take out loans.”
Christine Lagarde said that the future decisions of the central bank “Will ensure that key ECB interest rates are kept at a sufficiently tight level for as long as necessary”.
Next Monday’s discussion comes a week after the ECB announced another increase in its three key interest rates by 25 basis points, as at the previous meeting, putting deposit rates at their highest level ever in the eurozone.
This was the tenth consecutive rate hike by the central bank, which has raised rates by 450 basis points since July last year, the fastest rising cycle in the eurozone’s history.
In its summer macroeconomic forecasts, published in mid-September, the European Commission revised downwards this year’s inflation forecast in the eurozone to 5.6%, saying tight monetary policy is “working” but warning revenue loss and the projection deteriorated. for 2024.
Also on that day, the Community Council announced that the “very weak” economic activity in recent months in the eurozone and the EU, which is expected to continue, has led to a downward revision of economic growth forecasts in 2024, to 1.3%. and 1.4%.
The inflation rate has fallen in recent months after registering historical values due to the reopening of the economy after the Covid-19 pandemic, the energy crisis and the economic consequences of the war in Ukraine, but is still above the stated target of 2% ECB for price stability.
To achieve this, the ECB has tightened monetary policy with successive rate hikes, now at a slower pace.
Source: DN
