Net interest message from ECB President Lagarde

According to Christine Lagarde, President of the European Central Bank (ECB), the ECB is preparing to raise interest rates another half point in March.

In statements to the newspaper El Correo, Lagarde, when asked what will happen at the end of this month, said: “It is very likely that we will increase interest rates by 50 basis points. “This was a decision made at our last policy meeting, and all the numbers we’ve seen in recent days confirm that this rate hike is likely to happen.”

WHAT WILL BE THE PEAK OF INTEREST?

If the ECB raises interest rates by 50 basis points, the bank will raise its interest rates from last July to 350 basis points. It is not yet clear what the bank will do after March 16. The bank raised interest rates to 3 percent in February.

Some officials believe another 50 basis point hike may also be needed in May. Investors are pricing in a 4% spike in interest rates.

CORE INFLATION IS AT THE TOP

Inflation in the euro zone is more than four times the central bank’s 2 percent target. Core inflation is at a record level.

February CPI in the Eurozone monthly increased by 0.8 percent and annual 8.5 percent, calculated excluding food and energy. underlying CPI reached a record level of 5.6 percent.

WE EXPECT INFLATION TO DECREASE IN 2023

“I can’t tell you how much interest rates will go up,” Lagarde said in an interview. I know they are going to be higher than they should be right now, but we still have a lot of work to do because we can’t declare victory. “We are making progress, but we still have work to do.”

“I am confident that headline inflation will fall in 2023, while core inflation will be more stubborn in the near term,” Lagarde said.

GROWTH Optimistic

Regarding the recession, Lagarde said: “I expect slightly better economic growth compared to the recession in the last quarter of 2022. The ECB’s projections do not include a recession in 2023. We expect positive growth and increased economic activity in the future. throughout the year But it is true that there is great uncertainty.”