Lagardová: The ECB will face high core inflation

by time news

Core inflation in the Eurozone will be at a high level in the near term, so a 50 basis point increase in interest rates at the March meeting is increasingly certain. The head of the European Central Bank (ECB), Christine Lagardová, said this on Sunday for the Spanish media company Vocento.

Since July, the ECB has already raised interest rates by 300 basis points, and at the last meeting in early February, it made it clear that it is not finished in this process yet, and rates should go up again by half a percentage point. Recently, however, investors have begun to speculate whether the bank will proceed with an even more significant increase in rates. Core inflation is accelerating and reached a new record of 5.6 percent in February.

Core inflation too high

As the head of the ECB has now said, the indicated rate hike is “very, very likely”. In addition, it warned that core inflation, which excludes volatile food and fuel prices, may remain too high even after headline inflation moderates.

Some members of the Governing Council of the ECB have pointed out in recent days that interest rates in the Eurozone will have to continue to rise until the development of core inflation changes and it does not take a course towards the ECB’s inflation target. The bank set it at 2 percent. Many fear that core inflation may remain high in the eurozone for a long time, citing rising wages in the service sector as the reason.

“We must continue to use all measures necessary to bring inflation to 2 percent. And we will do it too,” added Lagardová.

Don’t overlook

ECB rate hikes will probably continue, Lagard said

You may also like

Leave a Comment