The president of the European Central Bank (ECB) said Thursday that the intention to raise interest rates again by 50 basis points in March “is not an irrevocable commitment” and suggests that there will be more increases later.
The ECB has decided today to raise its official interest rates by 50 basis points, placing the interest rate on the main refinancing operations at 3%.
This was the fifth consecutive increase and the central bank has indicated that it intends to approve a further 50 basis point increase at its March meeting.
At a press conference held after the meeting, the president of the institution, Christine Lagarde, said that the decision of the Governing Council on today’s rise and the intention in relation to that of March had “a broad consensus”.
Lagarde insisted that more significant interest rate hikes are needed to bring inflation back to the 2% target set by the ECB.
Asked if the cycle of increases will be completed after March, Lagarde said no.
Although the decision is not irrevocable, “the current scenarios” in terms of inflation suggest that the time has not yet come to stop the cycle of increases, he said.
“We know that we have a long way to go, we know that it has not finished,” he reaffirmed, about the path destined to bring inflation to the 2% target.
Since the start of the war in Ukraine almost a year ago, the ECB has faced a general rise in prices, which led it to start raising interest rates last July.
While in the United States inflation peaked in June 2022, in the Eurozone price increases peaked only in October, at 10.6%.
In January, inflation fell for the third consecutive month, standing at 8.5%, more than expected by economists, which is mainly due to the drop in energy prices.
But the improvement is relative, given that core inflation, which excludes energy and food prices, remains at 5.2%, which leads the entity led by Lagarde to consider that it is still early to moderate the monetary adjustment.
The euro zone economy proved to be “more resilient” than expected in dealing with the energy crisis and the war in Ukraine, Lagarde said, after posting slight growth in Gross Domestic Product (GDP) of 0.1% in the fourth quarter. of 2022. hopes to escape a recession.
Following the publication of the ECB decisions, the euro continued to fall against the dollar, trading at $1.0939.
Source: TSF
