The President of the European Central Bank (ECB), Christine Lagarde, suggested in an interview published this Wednesday the possibility of further rate hikes in the face of overinflation.
Over the past nine months, the monetary institution has acted “deliberately and decisively to fight inflation” with seven consecutive rate hikes through May, Lagarde said in an interview with Japan’s Nikkei newspaper, quoted by AFP.
However, the ECB president reaffirmed that “there is still some way to go”, suggesting that the cycle of rising interest rates may continue to dampen price appreciation.
Eurozone inflation reached 7% in April, well above the ECB’s target of 2%.
“There are factors that could pose significant upside risks to the inflation outlook”he said, “particularly with regard to wage increases in several European countries,” Lagarde stressed.
The price increases, which have led to a loss of purchasing power for households, have fueled demand for wage increases.
Economists expect the ECB to continue raising interest rates at its next two meetings before the summer recess.
On the economy, Lagarde said it “is in a better position than feared six months ago,” as Europe prepared to tackle energy supply without Russian gas.
However, he indicated that uncertainties remain regarding the development of the war in Ukraine and “some emerging signs of weakness regarding demand for manufactured goods”.
Source: DN
