Lagarde says she is still targeting a 2% inflation rate over the medium term. “We will try to keep it at that level for as long as necessary,” the Frenchwoman said during a meeting in Brussels. Inflation is still a multiple of her. The president of the ECB has thus removed the last doubt: next Thursday the next meeting on rates will be followed by a new step on rates.
Joachim Nagel, president of the German central bank, added that it is by no means certain that the ECB will stop raising interest rates after July. This is what Klaas Knot, his colleague at De Nederlandsche Bank (DNB), seemed to be alluding to last month. ‘In my view, it is still not certain that inflation will peak this summer. Several steps on interest rates are still needed,” Nagel said.
Since last year, the central bank has been trying to reduce inflation by raising interest rates, which makes borrowing more expensive and slows down the economy. Knot argues that most of the inflationary impact of these monetary moves has yet to materialize.