The European Central Bank (ECB) remains vigilant about price developments despite weakening inflation. According to ECB President Christine Lagarde, it cannot be ruled out that consumer prices could rise faster again, for example because oil prices are rising sharply due to the unrest in the Middle East.
The European Central Bank (ECB) remains vigilant about price developments despite weakening inflation. According to ECB President Christine Lagarde, it cannot be ruled out that consumer prices could rise faster again, for example because oil prices are rising sharply due to the unrest in the Middle East.
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The ECB recently took a pause on raising rates for the first time and financial markets are expecting the central bank to be done with rate hikes. It is even expected that interest rates could be lowered sometime next year. But Lagarde stated at an event organized by the British business newspaper Financial Times that there will be no interest rate cut for the ‘next few quarters’.
If energy prices cause an inflation shock, it is even possible that interest rates will be raised further, according to the ECB chairman. Interest rates in the eurozone are now at the historically high level of 4 percent. According to Lagarde, this should help bring inflation back to the 2 percent target. “But if there are large shocks, depending on the nature of the shock, we may have to revise that,” Lagarde said.
