(Finance) – The decision to increase the interest rates by 50 basis points, a larger measure than anticipated, is defined by the President of the ECB, Christine Lagardehow “appropriate“to the path of normalization of the monetary policy of the Eurozone aimed at favoring a return of inflation to the target of 2% in the medium term.
One measure – stresses the number one in Frankfurt – that takes into account the new estimates and inflation risks and which is accompanied by the new TPI tool (Transmission Protection Instrument), which will ensure correct transmission monetary policy decisions within the single currency bloc.
Speaking at the press conference, Lagarde confirmed that the decisions today were made unanimously by the Governing Council and stated that it was deemed appropriate to take a larger step this time to anticipate the normalization process and the exit from a negative interest rate regime, but the decisions on new increases of rates will be examined from time to time in the next months.
Eurotower number one confirmed that economic activity is slowing down and that downside risks to growth persist: Russia’s aggression against Ukraine and the well-known supply problems affecting the economy are weighing, even if some bottlenecks are gradually being reabsorbed. On the other hand, economic activity continues to benefit from reopening post-Covid and the increase in demand and travel, which will favor a new acceleration of the economy in the 4th quarter of this year.
The progressive is also confirmed increased inflationary pressuresdriven by the rise in energy prices and also food prices, import problems from Russia and bottlenecks. “We expect inflation to remain undesirably high in the coming months”admitted Lagarde, also envisaging a gradual return in the near future thanks to the stabilization of energy prices and the elimination of bottlenecks.
Lagarde also spoke of the ICC calling it a “specific tool to address specific risks” and to “remedy the instability and market disorders”. The response from him – the President assured – will be all the more extensive the deeper these unrest will be.
The number one of the ECB did not want to answer questions on specific issues, such as the resignation of Draghi as Premier and the use of the ICC for Italy and specified that the new anti-fragmentation instrument is admissible for all member countries, responds to a specific risk and is activated according to specific criteria by the board of directors.