The ECB should exit negative rates by the end of September-Lagarde | Photo credits: IMF Staff Photograph/Stephen Jaffe/CC BY-NC-ND 2.0
FRANKFURT, May 23 (Reuters) – The European Central Bank (ECB) is expected to raise its deposit rate to zero by the end of September and could raise it further if inflation stabilizes at 2%, its chair, Christine The guard.
“Based on the current outlook, we should be able to exit negative interest rates by the end of the third quarter,” she wrote in a blog post posted on the ECB’s website.
The deposit rate is currently set at -0.5%, which amounts to charging banks who want to deposit cash with the central bank.
“If we see inflation stabilizing at 2% over the medium term, a gradual continuation of the normalization of interest rates towards the neutral rate will be appropriate”, adds Christine Lagarde, who even mentions the possibility of a continuation of the rise beyond the neutral rate “if the economy of the euro zone were overheated”.
(Report Francesco Canepa, French version Marc Angrand, edited by Kate Entringer)