Financial markets now expect the ECB to raise its deposit interest rate by half a percentage point by December. However, according to Lagarde, such an increase would not solve high oil prices or supply chain shortages, which push up inflation.
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“It would not solve any of the current problems,” said the head of the ECB. “On the contrary. If we act too hastily now, the recovery of our economies could weaken significantly and jeopardize jobs, ”she added.
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According to her, the ECB will tighten monetary policy gradually and only if conditions allow.
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As expected, the ECB left its monetary policy unchanged at its meeting last week. Its main interest rate is currently zero percent and the deposit rate minus 0.5 percent.
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ECB chief economist Philip Lane said this week that the current situation does not require a significant tightening of monetary policy.
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According to Dutch central bank governor Klaas Knot, the ECB could raise interest rates by a quarter of a percentage point in the fourth quarter and move further in the first quarter of next year, Reuters reported.
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Inflation rates in the eurozone rose to 5.1 percent in January, a record since the introduction of the euro twenty years ago.
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The European Commission (EC) on Thursday predicted that average inflation would reach 3.5 percent this year. It should thus be well above the ECB’s 2% target.
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