European Central Bank Chief Indicates Plans for Interest Rate Increases

European Central Bank

During a speech on Thursday, European Central Bank President Christine Lagarde indicated that it is still uncertain if core inflation has reached its highest point in the euro zone. This suggests that there could be additional increases in interest rates across the continent.

European Central Bank President Christine Lagarde, in a speech delivered on Thursday in Hanover, Germany, expressed that it is not yet evident whether core inflation in the euro zone has reached its highest point. This indication suggests that there may be further increases in interest rates on the continent. Lagarde emphasized the need to continue working towards achieving sufficiently restrictive levels of interest rates, highlighting that there is still progress to be made in this regard.

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ECB President Signals Potential for More Interest Rate Hikes in Euro Zone

Following data showing a significant slowdown in inflation last month in the euro zone, the central bank’s President spoke, suggesting that the era’s toughest monetary tightening campaign could soon come to an end. However, Lagarde emphasized that there is still no clear evidence to support this conclusion, indicating the possibility of further rate hikes in the coming months.

Considering core price pressures, it appears that at least one more rate hike may be necessary to achieve the 2% inflation target. ECB Vice President Luis de Guindos commented on Wednesday that he cannot confidently claim victory at this point. Another rate-setter, Madis Muller, expressed the likelihood of more than one additional quarter-point rate adjustment.

ECB President Emphasizes Strong Transmission of Monetary Policy Amid Concerns about Inflation

The European Central Bank’s chief stated that while the inflation outlook remains unsatisfactory, monetary policy is effectively impacting credit conditions. The actions taken so far are expected to have a significant influence.

“These rate hikes are already having a powerful impact on bank lending conditions,” she noted. “Given the speed and extent of these increases, we anticipate further tightening in the future.”

Also Read This Related: European Commission Plans to Unveil Digital Euro Regulatory Framework in June

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Meanwhile, in the United States, the FOMC is scheduled to convene on June 15th and 16th to discuss potential interest rate hikes. Analysts predict another increase in the interest rates within the current cycle.

Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.

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