Message from ECB President Lagarde to “keep raising interest rates”

Christine Lagarde, President of the European Central Bank (ECB), announced that they are determined to continue with the current path of interest rates. Lagarde noted that further increases in interest rates could occur in the future to reduce inflation.

Markets had thought for some time that inflation in the euro zone had peaked and that the ECB would rein in interest rate hikes. But speaking at the World Economic Forum in Davos, Lagarde said markets should abandon this view.

“I invite the financial markets to reconsider their position,” Lagarde said. “We will stay on the course of rate hikes,” said the ECB president. We will raise interest rates to the limit zone and keep interest rates in the limit zone for a long time to return to the 2 percent inflation target,” he said.

INCREASED EURO

The euro rose 0.2 percent against the dollar and traded at $1.0821, just after Lagarde’s hawkish words. The euro/TL exchange rate registered 20.34 during the day.

Euro zone inflation peaked at 10.6 percent in October, while the ECB raised interest rates by 2.5 percentage points in total last year.

The ECB’s next interest rate decision will be announced on February 2. While the bank is expected to raise the policy rate by 50 basis points, Lagarde’s messages raised the possibility of a 50 basis point hike at the March meeting.