2023-05-10 10:53:27
The President of the European Central Bank (ECB), in an interview published Wednesday in the Japanese press, leaves the door open to further rate hikes, in the face of inflation still deemed too high.
Over the past nine months, the European monetary institution has “acted very deliberately and decisively to fight inflation” with seven rate hikes in a row until May, recalled Ms. Lagarde in this interview with the Nikkei daily.
The French leader, however, acknowledged that there was “still a long way to go”, suggesting that the guardians of the euro will have to further tighten the screw on credit, its favorite weapon to lower price tensions.
Foodstuffs and a wide range of goods continue to see their prices rise. Inflation in the euro zone reached 7% in April, still sailing well above the 2% target set by the ECB.
“There are factors that can induce significant upside risks to the outlook for inflation”, “in particular, with regard to wage increases in various European countries”, according to Ms. Lagarde.
The rise in prices weighs on the purchasing power of households and fuels demands for wage increases.
Economists now expect the monetary institute to raise interest rates at its two scheduled meetings before the summer break.
Regarding the economy, the euro zone is “in a better position than we feared six months ago”, when Europe had to deal with energy supplies by having to do without Russian gas, said Ms. Lagarde.
However, a shadow remains in her view: great uncertainties remain, “including what will happen in Russia’s war of aggression against Ukraine, and some emerging signs of weakness in demand for manufactured goods”.
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