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Plan to raise interest rates depends on economic data, says ECB president

The president of the European Central Bank (ECB), Christine Lagarde, reiterated this Tuesday (28) the institution’s plans to raise interest rates next month and in September, but said that the commitment will depend on the behavior of economic data.

In a speech at the ECB Forum, in the Portuguese city of Sintra, Lagarde confirmed that the ECB intends to raise its three main interest rates by 25 basis points at the monetary policy meeting on July 21, at a time when inflation in the euro hits record levels amid the war in Ukraine.

Lagarde also said a larger rate hike would be appropriate at the September meeting “if the medium-term inflation outlook persists or deteriorates.”

For after September, Lagarde predicted a “gradual but sustained” trajectory of further rate hikes.

Lagarde also confirmed that the ECB decided to accelerate the development of an instrument to deal with the so-called “fragmentation” in the euro zone, referring to the divergences in borrowing costs of countries that make up the bloc.

“The new instrument will have to be effective, proportionate and contain sufficient safeguards to preserve a sound fiscal policy”, he said.

Source: CNN Brasil

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