The president of the European Central Bank, Christine Lagarde, assured this Monday that she is “aware” of the “pain and suffering” caused by the rise in interest rates, the highest level ever recorded in the euro zone, but insisted on stability of prices .
“Based on the current assessment, I believe there is a substantial contribution to bringing inflation back to the 2% target in a timely manner. Do we also take into account the pain that this causes and the suffering that exists? Yes, we are aware, you know.” I can assure you,” said the leader of the European Central Bank (ECB), in an ordinary hearing in the Economic and Monetary Affairs committee of the European Parliament, in Brussels.
Responding to a question from socialist MEP Pedro Marques about the impact on families of successive increases in official interest rates in the euro zone, Christine Lagarde said: “We know that, for example, 30% of households in the Member States have variable interest rate mortgages and it is difficult, we know.”
“And we also know that the price of fuel, the price of gasoline at the pump, the price of energy in general, is also taking a toll on low-income families, yes, we know that. But we also know that our mission, Our duty is to ensure that inflation returns to its objectives in a timely manner,” stressed the president of the ECB.
And he concluded: “The faster we achieve it, 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 request loans.”
Christine Lagarde said that future decisions by the central bank “will ensure that the ECB’s official interest rates are set at sufficiently tight levels for as long as necessary.”
This Monday’s debate takes place a week after the ECB announced a new increase in the three official interest rates by 25 basis points, as in the previous meeting, placing the deposit rate at the highest historical level in the area. 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 in mid-September, 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. by 2024.
Also that day, the community executive announced that the “very weak” economic activity in 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 1.4%.
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
