The European Central Bank (ECB) intends to continue raising interest rates in July, its president, Christine Lagarde, announced, as she believes it is too early to declare victory in the fight against inflation in the euro zone. Speaking at an ECB forum in Sintra, Portugal, Lagarde said that their work is not done and that unless there are significant changes in the outlook, they will continue to raise rates in July. She also noted that in the near future, it is unlikely that the central bank will be able to say with certainty that interest rates have peaked.
At its last monetary policy meeting in June, the ECB decided to carry out its eighth rate hike in less than a year, increasing its benchmark deposit rate to 3.5%. At the time, Lagarde had described a further increase in July as “very likely.”
Although some voices have called for a pause in the monetary tightening cycle so as not to put further pressure on economic activity, Lagarde warned against too rapid a change in monetary policy due to a more persistent inflationary process in the euro area. She also emphasized the uncertainty surrounding the impact of monetary policies, both in terms of duration and level.
In summary, the ECB plans to continue raising interest rates in July as it considers that the fight against inflation is not yet over. Lagarde warned of a possible further increase in the near future and highlighted the uncertainty regarding the effects of monetary policies in the euro area.