2023-06-01 12:41:29
Over the past nine months, the monetary institution has decided on seven rate hikes in a row, a total of 3.75 percentage points.
By Le Figaro with AFP
Posted update
This content is not accessible.
The European Central Bank (ECB) will continue its rate hikes but the “cruising altitudeis approaching as inflation recedes, its president Christine Lagarde said Thursday at a banking convention. “We will keep moving forward – with determination and without discouragement – until we see inflation return to our medium-term target of 2% in due course.“, declared Christine Lagarde in Hanover, in front of the congress of the German Savings Banks.
Over the past nine months, the monetary institution has decided on seven rate hikes in a row, ie a cumulative 3.75 percentage points, with a step of 0.25 point in May, which was the lowest of the cycle. “At departure, the aircraft should climb steeply and accelerate rapidly. But as it gets closer to its target altitude, it can reduce acceleration and maintain its current speed“Explained in the tone of the metaphor the French central banker. “Now we are approaching our cruising altitude“, she added.
This content is not accessible.
The first effects of these accumulated rate hikes are visible – credit ebb, slowdown in demand – but the ECB is still far from having won the battle against high inflation. Since its peak at 10.6% year-on-year last October, inflation in the euro zone has certainly fallen to 6.1% in May, according to Eurostat on Thursday. But it is still three times above the target set by the ECB.
Also, two increasesmore and each 25 basis points (in June and July)“should intervene”before keeping them unchanged“, according to Salomon Fiedler, analyst at Berenberg. Headline inflation is receding due to lower energy prices, but there is “no clear evidence that core inflation (excluding energy and food) has peaked“warned Christine Lagarde.
” READ ALSO – Jean-Claude Trichet: “The ECB is an anchor of stability for the economic and financial system”
Salary increases
The Governing Council of the ECB was already concerned about this in May, according to the minutes of the monetary policy meeting published on Thursday: “some of the latest wage increases, especially in the public sector, have been seen as cause for concernaround the table, the document reads. Negotiated salaries, including bonuses,increased by more than 5% year-on-year in January and February“, he was underlined, adding “upside risks to inflation» future.
In services in particular, wages, as a key component of final prices, will play aincreasingly important in explaining underlying inflationEspecially since employment there is tight, observed the guardians of the euro. Fact, “the longer inflation stays above our target, the greater the risk of it infiltrating people’s expectations“warned Ms. Lagarde.
According to its latest forecast in March, the ECB sees inflation returning to 2% “before the second half of 2025“, which would make four years of exaggerated price increases.
This content is not accessible.
1685630217
#Interest #rates #close #cruising #altitude #ECB #President