The European Central Bank raises rates by half a percentage point. The Frankfurt Institution is therefore sticking to its plan to tighten its monetary policy to fight against inflation, despite the turbulence affecting the banking sector.
Regardless of the events of recent days, Christine Lagarde persists and signs. A new turn of the monetary screw, therefore, of 50 basis points. Admittedly, inflation should drop to 5.3% this year, but it could rise again in 2024. Now is clearly not the time to give up the fight. On the contrary.
The European Central Bank is the first since the fall of Silicon Valley Bank and two other American regional banks to communicate that it will continue its monetary policy. It even undertakes to raise its rates again significantly in the months to come, while the specter of a new banking crisis could have prompted it to be more cautious.
But the economic horizon seems to be brightening further. In addition to lower inflation, the Eurozone is expected to experience stronger than expected growth in 2023. Energy price inflation is also expected to slow. Europe’s economy is holding up in the tough international environment, euro guardians said at their meeting in Frankfurt.
“We are monitoring the current tensions and remain ready to react”
” We are closely monitoring the current tensions in the markets and remain ready to react if necessary to preserve price stability and financial stability in the euro area. The banking sector in the euro zone is resilient, its capital and liquidity needs are met. Allow me to reassure you: we remain determined to fight inflation and bring it back below 2% said Christine Lagarde, President of the ECB.
Christine Lagarde: “We are monitoring current tensions and remain ready to react”
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