The interest rate hike is getting closer. In the face of rising inflation, European Central Bank (ECB) president Christine Lagarde has gradually changed her line. In February, she maintained her position of low key rates, without ruling out an upward revision. Then, in an interview on the US television channel CNBC on 22 April, she confirmed that the ECB would end its asset purchase programme (APP) at the beginning of the third quarter and raise rates before the end of the year.
This could happen sooner. In several media outlets she has now mentioned only “a few weeks” between the end of the APP and the rate hike, which would mean as early as July.
This is what the ECB’s “hawks”--the nickname given to supporters of a restrictive monetary policy in the face of high inflation--had already been planning. According to the latest Eurostat figures, inflation reached an annual rate of 7.5% in April in the euro zone. This is a long way from the ECB’s medium-term target of 2%.
“After the first rate hike, the normalisation process will be gradual,” said Christine Lagarde. This may point to further rate hikes to come after the first one in July.
The monetary institute is planning a monetary policy meeting on 9 June in Amsterdam, and another in Frankfurt on 21 July.
This article was originally published in French in Paperjam. It has been translated and edited for Delano.