The President of the European Central Bank (ECB), in an interview published Wednesday in the Japanese press, leaves the door open for further rate hikes, in the face of inflation still deemed too high.
Over the past nine months, the European monetary institution has acted very deliberately and decisively to fight against inflation with seven rate hikes in a row until May, recalled Ms. Lagarde in this interview with the daily. Nikkei.
The French leader, however, acknowledged that there was still a long way to go, suggesting that the guardians of the euro will have to further tighten the screw on credit, its favorite weapon to lower pressures on prices.
Foodstuffs and a wide range of goods continue to see their prices rise. Inflation in the euro zone reached 7% in April, still sailing well above the 2% target set by the ECB.
Pay rises in sight
There are factors that can pose significant upside risks to the inflation outlook, in particular, with respect to wage increases in various European countries, according to Christine Lagarde.
The rise in prices weighs on the purchasing power of households and fuels demands for wage increases.
Economists now expect the monetary institute to raise its interest rates at its two meetings scheduled before the summer break.
Regarding the economy, the euro zone is in a better position than we feared six months ago, when Europe had to prepare for energy supplies by having to do without Russian gas, believes Christine Lagarde.
However, she said there is a dark shadow on the board: great uncertainties remain, including what will happen in Russia’s war of aggression against Ukraine, and some emerging signs of weakness in demand for manufactured goods.
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