‘Inflation still too high’: ECB to come up with new interest rate hike this month. Consumers and businesses need not expect the European Central Bank (ECB) to stop raising interest rates for the time being. According to President Christine Lagarde, there are no signs yet that high inflation, such as food becoming more expensive, has peaked. This is needed before the ECB will stop its measures to curb inflation.
The central bank has been trying to get inflation down since last year by raising interest rates, which makes borrowing money more expensive and slows down the economy. Knot argues that most of the impact on inflation of those monetary moves is yet to be seen.
Lagarde says he is still aiming for 2 percent inflation in the medium term. “At that level, we will try to keep it as long as necessary,” said the Frenchwoman during a meeting in Brussels. Inflation is still a multiple of that. The ECB president has thus removed the last doubt: next Thursday at the next interest rate meeting there will be a new interest rate step.
Joachim Nagel, president of Germany’s central bank, added that it is far from certain that the ECB will stop raising interest rates after July. Klaas Knot, his colleague at De Nederlandsche Bank (DNB), seemed to allude to that last month. ‘In my view, it is not at all certain yet that inflation will peak this summer. Several interest rate hikes are still needed,’ Nagel said.
The central bank has been trying to get inflation down since last year by raising interest rates, which makes borrowing money more expensive and slows down the economy. Knot argues that most of the impact on inflation of those monetary moves is yet to be seen.
