To curb inflation.. Lagarde insists on the need to continue to raise interest rates

Lagarde said in a speech Thursday at a conference of German bank “Sparkasse” in “Hanover” that inflation rates are “very high” at present and “will remain so for a long time”.

She added that this affair obliges the European Central Bank “to insist on its current budgetary policy, which consists in continuing to raise interest rates in order to reach the acceptable European inflation limit of 2%”.

In this context, she underlined that the European Central Bank will continue its policy of raising interest rates “until it is sure that inflation rates have reached the required levels”.

Lagarde’s remarks come at a time when the European Central Bank has been raising interest rates since July last year, to 3.75% at present, after years of adopting lending policies subsidies and the injection of money into the financial markets with the aim of encouraging borrowing and stimulating growth.

For his part, Olli Rehn, member of the Governing Council of the European Central Bank, confirmed that the bank will not start cutting interest rates or easing monetary policy until the underlying inflation rate of the euro zone does not begin to decline continuously.

“We have recently reached a point where interest rates have become a binding economic activity,” Ren said, in a speech in the Japanese capital, Tokyo, (Thursday). “In my opinion, it is important to see a steady and sustained decline in the underlying inflation rate before considering easing monetary policy again.” According to the Bloomberg agency.

News reports say the bank is expected to make a new decision to raise interest rates on June 15.

According to what was published by the statistical agency of the European Union “Eurostat”, the annual inflation rate in the euro zone should reach 6.1% in May 2023, against 7.0% at the end of last April.

The agency said lower energy prices were the main driver behind the inflation rate falling to its lowest level in a year.

The European Central Bank has raised interest rates 7 times in a row since last July, after years of negative or zero interest rates. The main interest rate is currently 3.75% on loans to banks from the central bank and 3.25% on bank deposits with the central bank.

Read the Latest World News Today on The Eastern Herald.