Lagarde signals end to ECB negative interest rates by September

The European Central Bank will in all likelihood draw a line below the era of poor hobby prices by using September, its president Christine Lagarde stated Monday because the eurozone confronted hovering inflation.

The ECB is “probable to be in a position to exit terrible interest fees through the end of the third region”, Lagarde wrote in a blog put up.

First, the end of the bank’s bond-buying stimulus program “very early in the third quarter” would pave the way for a “rate lift-off at our meeting in July”, she said.

The initial hike would be the ECB’s first in over a decade and would lift rates from their current historically low levels.

These include a minus 0.5 deposit rate which effectively charges banks to park their excess cash at the ECB overnight.

Lagarde has come under increasing pressure from colleagues on the ECB’s governing council to raise rates sooner rather than later as inflation in the eurozone has taken off.

Consumer prices soared at a rate of 7.5 percent in the eurozone in April, an all-time high for the currency club and well above the bank’s two-percent target.

The renewed surge has been driven by the rise in energy prices due to the Russian invasion of Ukraine, prompting other central banks to reach for interest rate hikes.

The Federal Reserve raised rates by an unusually large 50 basis points at the beginning of May.

Any hikes beyond zero would be dependent on the “inflation outlook”, Lagarde said.

If the forecasted rate of inflation seemed to be stabilizing around the ECB’s two-percent goal, similarly increases “could be suitable”.

ECB policymakers will determine their course of motion in the imminent June 9 and July 21 conferences.