The president of the ECB maintained this Thursday that, given the current data, interest rates have reached levels that, if maintained for a long enough period, will reduce inflation, but he considered it too early to say that they have reached their maximum.
“It is too early to say whether the interest rates of the European Central Bank (ECB) have reached their maximum,” said the president of the institution, Christine Lagarde, at the press conference after announcing the tenth consecutive increase in interest rates. , with the aim of fighting inflation. .
Christine Lagarde highlighted that, “based on its current assessment, the Governing Council considers that official interest rates have reached levels that, if maintained for a sufficiently long period, will contribute substantially to the timely return of inflation to the target.”
Asked if the ECB thus closes the door to a new rise in interest rates, Christine Lagarde stressed that the institution’s next decision will depend on “economic data”, in particular the assessment of the inflation outlook, light of the economic and financial data that are available. the dynamics of underlying inflation and the strength of the transmission of monetary policy.
“We cannot say that we have reached the peak,” he said, adding that “future decisions of the Governing Council will ensure that official interest rates are set at sufficiently restrictive levels, for as long as necessary,” he reaffirmed.
According to Lagarde, the institution’s next decision will depend “on economic data”, especially on the assessment of inflation prospects, the dynamics of underlying inflation and the strength of the transmission of monetary policy.
The ECB today announced an increase of 25 basis points in the three interest rates.
The interest rate applicable to main refinancing operations (the rate that banks pay when requesting loans from the ECB for a period of one week) thus increases to 4.5%.
The interest rates applicable to the permanent liquidity provision facility (the rate at which banks can obtain liquidity from the Eurosystem overnight, i.e. at a higher cost than overnight loans) and the interest rates of the permanent deposit facility (the rate at which banks can make overnight deposits in the Eurosystem) are increased to 4.75% and 4%, respectively.
When the ECB changes key interest rates, this is reflected throughout the economy, with some of the most visible aspects being bank loans, market level loans, real estate credit, interest rates on bank deposits, etc. ., other investment instruments.
Source: TSF
