The interest rates of the European Central Bank have reached a level which “may be sufficient” to bring inflation back to the (ECB) target, a senior official of the institution said on Friday, the day after a tenth increase in a row.
With this latest increase made on Thursday, the level of interest rates, if maintained over time, may be sufficient for inflation to actually converge towards our objective of 2%declared Luis de Guindos, vice-president of the ECB, in an interview with Spanish radio COPE.
The monetary institution again raised its reference interest rate by 0.25 points on Thursday to bring it to 4.0%, its highest level since 1999, defying those who called for a truce so as not to worsen the slowdown in the economy. economic activity in the euro zone. In a carefully worded formulation, ECB officials signaled that the cycle of monetary tightening was coming to an endwithout completely closing the door to a new increase if the situation required it.
High rates for a long time
The now high cost of credit must make a substantial contribution to reducing inflation, which also means that rates are maintained at their current high level for a sufficiently long period, according to the institution’s press release.
We have not decided or discussed any reduction (rate), nor even uttered this word, ECB President Christine Lagarde told the press on Friday during the meeting of the Ministers of Economy and Finance of the European Union in Santiago de Compostela (Spain).
This fairly long duration of maintaining rates can be defined in terms of months, quarters, and will be decided based on the data, she added. The tenth rate increase in 14 months has sparked criticism in political circles in certain countries in the south of the euro zone.
The ECB, not caring about the economic difficulties of families and businesses, increases the cost of money, declared Thursday evening Matteo Salvini, Italian vice-president and boss of the far-right transalpine party The League, in front of Italian television. Lagarde lives on Mars, he exclaimed.
The ECB wants the economy to cool down to lead to a slowdown in inflation (which allows) a return to growth, explained Mr. de Guindos. It would be much worse if we did nothinginsisted the former Spanish Finance Minister, because we would then see that inflation would skyrocket with inflation forecasts out of control.
Reproduction forbidden.