The president of the European Central Bank (ECB) promised this Friday inflation below 2% “in due course”, without committing to raising interest rates, and pointed out that the weak growth of the euro zone “is not a recession” .
“We want to return to our medium-term objective of 2% [de taxa de inflação] and we will return to that objective and in due time,” declared Christine Lagarde, at a press conference after the informal meeting of European Finance Ministers, in the Spanish city of Santiago de Compostela within the framework of the Spanish presidency of the Council of the EU. .
A day after a new increase, the person in charge stressed: “Our mission is price stability, our fight is against inflation and our main instrument, in these circumstances, are interest rates, so […] “We have decided to raise interest rates again by 25 basis points to reinforce progress towards achieving our target and win the battle against inflation.”
At a time of timid economic growth, weak consumption in the face of a restrictive monetary policy and still high inflation, Christine Lagarde reiterated that the ECB “will set interest rates at a sufficiently restrictive level for as long as necessary to achieve the target of the 2%”. .
Already speaking about recent data, which led to a downward revision of euro area growth, the ECB leader noted that the single currency area “will not grow as much as previously expected, but will recover in 2024” , so “weaker growth does not mean recession.”
Christine Lagarde also called on Member States to “focus on reducing deficits and debt, which makes it even more important to spend money the right way”, namely on ‘green’ and digital investments.
Also at a press conference, the president of the Eurogroup, Paschal Donohoe, stressed that “fiscal policy must be prudent, it must be careful, it must follow a restrictive orientation and it must work in line with the changes that are being made at the policy level.” monetary”.
Eurozone finance ministers today discussed the macroeconomic context in the single currency area and should insist on commitments to budgetary prudence, following a new increase in interest rates by the ECB.
Today’s debate comes a day after the ECB announced a further increase in the three key interest rates by 25 basis points, as in the previous meeting, placing the deposit rate at the highest level ever recorded in the area of the euro.
This was the 10th consecutive interest rate hike by the central bank, which has raised interest rates by 450 basis points since July last year, the fastest raising cycle in the history of the euro area.
In its summer macroeconomic forecasts, published last Monday, the European Commission revised downwards the inflation forecast for this year in the euro zone, to 5.6%, stating that the restrictive monetary policy “is working”, but warned of income losses and worsened the projection for 2024. .
Also that day, the institution announced that the “very weak” economic activity of recent months in the euro zone and the EU, which is expected to continue, led to a downward revision of economic growth projections in 2024, until 1.3% and 1.3%. .4%.
The inflation rate has been falling 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 still above the objective of 2 % marked. .BCE for price stability.
To achieve this, the ECB has tightened monetary policy with successive increases in interest rates, now at a slower pace.
Source: TSF
