Lagarde to raise interest rates: Still waiting

Financial markets that have appreciated faster-than-expected rate hikes in Europe will have to wait.

This was answered by the speculation about when the next interest rate hike will come, the President of the ECB, Christine Lagarde, in an interview with Redaktionsnetzwerk Deutschland.

Her comments come as an answer to the question why the central bank does not fight higher prices with interest rate hikes.

“This would not solve any of the current problems. On the contrary, if we act hastily now, economies could recover significantly worse and jobs could be jeopardized. This would not help anyone,” he said.

Speculation about faster, higher interest rate hikes in the eurozone has risen since the previous ECB meeting last week, when Lagarde refused to rule out a 2022 rate hike, which some economists and market observers have taken as an aggressive turn.

In comments to members of the European Parliament on Monday, he also pledged a “gradual approach to interest rate changes”.

“We have to keep in mind that every decision we make usually comes into full force 9-18 months later,” he told German media.

“At the moment we are watching the rising figures for inflation, which we include in our forecast. Inflation may be higher than we predicted in December. We will analyze it in March and then we will see what happens next.”

Lagarde said one reason for optimism on the inflation front was most of the rise, due to a sharp rise in energy prices.

Noting that oil prices have risen from below 20 euros in April 2020 to around 90 euros a barrel now, he said the rise is not sustainable.