Christine Lagarde indicated that she would support hiking the ECB’s main interest rate in July, leading economists set to announce the first rate hike in more than a decade.
- In a speech in Slovenia, Lagarde, the President of ECB, stated that she expected the bank to halt the expansion of its balance sheet via bond purchases early in the third quarter.
- Lagarde further noted that actions that demonstrate the bank’s commitment to price stability would be critical in ensuring businesses’ and households’ expectations of future inflation did not increase further and test the credibility of the bank.
- Eurozone inflation rose to a record of 7.5% in April, nearly four times the ECB’s target of 2 percent.
The remarks show that Lagarde supports the growing number of governing council members that have advocated for a 25 basis-point increase in the ECB’s deposit rate at the July 21 policy meeting.
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Source: European Central Bank.