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Mr Lagarde: The first ECB rate hike could take place in July

European Central Bank President Christine Lagarde said the first rate hike in more than a decade could be made in July, but downgraded the idea of ​​such a move by half a unit amid concerns about economic expansion.

With more and more board members preparing for the summer interest rate hike, Lagarde told Dutch television that the increase could take place “weeks” after the end of the net bond market at the beginning of next quarter – according to her instructions. ΕΚΤ.

“We will follow the path of stopping the net purchase of assets,” he said. “Then, sometime after that – which could be a few weeks – we will raise interest rates.”

ECB officials are increasingly worried about record inflation, choosing to focus on the risks of uncontrolled price increases amid fears of a Russian invasion of Ukraine and new supply chain problems derailing the pandemic recovery.

As a sign of inflation concerns, Klaas Knot from the Netherlands became the first board member this week to put forward the idea of ​​a 50 basis point move at the ECB meeting in July, if and only if the data worsens.

Asked about a possible increase of this magnitude, Lagarde said “it is not something I can tell you right now”, stressing that she shares “the same direction” with Knot, but that economic growth should not be jeopardized. .

“We have to make sure that this is done gradually enough so that we do not put a brake on this moving car,” he said. “We definitely need to raise the gas to slow inflation, but we can not break any speed.”

With inflation almost four times the 2% target and the US Federal Reserve already raising more than usual in April, critics have blamed the ECB – whose deposit rate is now -0.5 % – that it moves too slowly. Lagarde disagreed.

“I can not reduce the price paid for a loaf of bread at the moment, because the interest rate has nothing to do with it at the moment,” she said.

Source: Capital

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