The chief economist of the European Central Bank Philip Lane estimated Monday that the exit from negative rates in the euro zone will have to be done gradually, confirming the perspective recently drawn by the president of the institute Christine Lagarde.
Getting out of negative rates in September makes sense amid record inflation, and a benchmark pace to do that would be two hikes of 25 basis points each, in July and September, Philip Lane said in an interview. to the Spanish business daily Cinco Das.
The ECB’s benchmark rate is currently set at -0.5%, the level it has been at since 2019. This is the interest rate paid by banks that entrust part of their dormant deposits to central banks in the zone. euro.
This policy, which began in 2014, aimed to support credit to households and businesses to stimulate economic activity and, ultimately, prices.
Last Monday, ECB President Christine Lagarde wrote that an exit from negative interest rates was likely by the end of the third quarter, ie in September, in a well-regarded blog post.
A gentle rise
Any talk of further moves (in rates) should argue for a stronger move than this sequence of increases in July and September, adds Lane.
Bank charges : up €259 savings thanks to our comparator
Within the Governing Council of the ECB, the Dutchman Klaas Knot sees a rate hike of 50 basis points in July as possible if inflation increases.
Inflation reached a record 7.5% over one year in April in the euro zone, driven by soaring energy prices against a backdrop of war in Ukraine, and the indicator for May, expected on Tuesday, will be very scrutinized.
The ECB appears to want to tread lightly to rein in inflation, while the U.S. Fed estimated last Wednesday that rate hikes of half a percentage point, faster than the usual quarter-point hikes, will no doubt be appropriate in the months to come.
ECB: Upcoming rate hikes could be a challenge
Our current assessment of the situation, where we believe the medium-term inflation outlook is in line with our 2% target, calls for a gradual approach to monetary normalization, according to Lane.
Reproduction forbidden.