Lagarde sees ‘strong likelihood’ of ECB rate hike if inflation stays high

Lagarde sees ‘strong likelihood’ of ECB rate hike if inflation stays high

Lagarde sees ‘strong likelihood’ of ECB rate hike if inflation stays high

Lagarde sees ‘strong likelihood’ of ECB rate hike if inflation stays high

Advertisement

If the wave of inflation gripping the eurozone doesn’t impede, ECB chief Christine Lagarde said on Friday she sees “a robust chance” that the bank will hike rates before 2022 ends.

European international locations have visible charges rise after the pandemic extensively disrupted supply chains, and the state of affairs grew worse starting in past due February after Russia invaded Ukraine, causing a spike in energy and meals expenses.

While central banks worldwide have started tightening borrowing costs to fight inflation as the impact of the war in Ukraine spread, the Frankfurt-based bank has refused to do the same, despite pressure to do so.

In an interview on CNBC, Lagarde said central bankers will be watching inflation expectations, wages, and other indicators, but, “If the situation continues, as predicted at the moment, there is a strong likelihood that rates will be hiked before the end of the year. How much how many times remains to be seen and will be data-dependent.”

She also said the bank would likely end its asset purchase program meant to support the economy during the pandemic “in the course of the third quarter with a high probability that it will be early in the quarter.”

Advertisement

Eurozone inflation hit a record 7.5 percent in March, above the central bank’s medium-term target of two percent.

The United States is also dealing with high inflation that climbed to a record 8.5 percent in the 12 months to March.

Speaking alongside Lagarde, US Treasury Secretary Janet Yellen acknowledged that prices may remain high even as the Federal Reserve moves to hike rates.

“I think we’ll have to put up with high inflation for a while longer,” she said.

The Fed made its notable hike final month in view that slashing borrowing charges to 0 when the pandemic began, and at its meeting, next month is anticipated to growth rates by half a percentage factor, and continue trekking at some stage in the year.

Advertisement
Advertisement
Read More News On

Catch all the Business News, Breaking News Event and Latest News Updates on The BOL News


Download The BOL News App to get the Daily News Update & Follow us on Google News.


End of Article

Next Story