European Central Bank President Christine Lagarde said the first rate hike in more than 10 years could come weeks after the end of the bond-buying program early next quarter, when an already growing number of ECB members hint that a rise will come in July.
“The first rate hike will take place sometime after the end of the asset market,” Lagarde said.
“We have not yet set exactly when, but I was very clear that this could mean a period of just a few weeks,” she said in a speech in Ljubljana, advocating a “gradual” normalization of monetary policy after the initial increase.
Faced with record inflation, which is almost four times the ECB’s target of 2%, Lagarde’s colleagues at the ECB are increasingly pushing publicly for an increase in the July 21 meeting.
While the Federal Reserve and the BoE have begun tightening the policy, the ECB has not increased its borrowing costs since 2011. Also, its deposit rate has been negative since 204.
Markets are discounting interest rates by 0.25% from the ECB in July and September, with further increases until the end of the year.
They also expect that in two years the deposit rate will reach 1.5%.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
