© Bloomberg. Christine Lagarde, president of the European Central Bank (ECB), during a news conference in Frankfurt, Germany, on Thursday, March 10, 2022. The ECB unexpectedly accelerated its wind-down of monetary stimulus, signaling it’s more concerned about record inflation than weaker economic growth as Russia’s invasion of Ukraine threatens to propel prices even higher.
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European Central Bank President Christine Lagarde said a first interest-rate increase in more than a decade may follow “weeks” after policy makers conclude net bond-buying, likely next quarter.
“The first rate hike, informed by the ECB’s forward guidance on the interest rates, will take place some time after the end of net asset purchases,” Lagarde said Wednesday. “We have not yet precisely defined the notion of ‘some time,’ but I have been very clear that this could mean a period of only a few weeks.”
After the initial hike, policy normalization “will be gradual,” she said in a speech in Ljubljana, Slovenia.
Faced with inflation at almost four times the ECB’s 2% goal, Lagarde’s ECB colleagues are increasingly pushing for a hike as soon as July. While the Federal Reserve and the Bank of England are well under way with tightening monetary policy, the ECB hasn’t raised borrowing costs since 2011 and its deposit rate has been negative since 2014.
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Lagarde Says ECB Hike May Follow ‘Weeks’ After Bond-Buying Ends