Lhe European Central Bank could start raising interest rates as early as July, its president, Christine Lagarde, warned on Wednesday, as the euro zone faces soaring inflation. The ECB “will first end” its net asset purchases “at the start of the third quarter”, i.e. July, then a first rate hike will take place “some time later”, declared Christine Lagarde, specifying that “ that could mean a period of just a few weeks.”
The monetary institute has planned to hold its next monetary policy meeting on June 9 in Amsterdam, then the next one on July 21 in Frankfurt, before the summer break. “After the first rate hike, the normalization process will be gradual,” added Christine Lagarde, which suggests more rate hikes to come after the first seed of the summer.
Record inflation in April
Within the ECB, the clan of “hawks”, supporters of a more restrictive monetary policy in the face of high inflation, is in a hurry to start the cycle of rate hikes. “While inflation in the euro zone continues to be high, we must act,” insisted the President of the German Bundesbank on Tuesday. And to recommend “a first stage of normalization of the interest rates of the ECB in July”, like Isabel Schnabel, member of the executive board of the institute, who declared it at the end of April. In the eurozone, inflation hit a record 7.5% year on year in April, according to Eurostat, well above the ECB’s medium-term target of 2%.
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