Lagarde believes it is too early to talk about peaking rates

The ECB President said this Thursday that, given current data, interest rates have reached a level that, if maintained for a sufficiently long period, will reduce inflation, but considered that it was too early to say that they had reached their peak.

“It is too early to say whether European Central Bank (ECB) interest rates have peaked,” the institution’s president, Christine Lagarde, said at a news conference after announcing its tenth consecutive interest rate hike to combat inflation. .

Christine Lagarde stressed that “based on its current assessment, the Governing Council believes that key interest rates have reached a level that – if maintained for a sufficiently long period – will make a significant contribution to a timely return of inflation to target. “

Asked whether the ECB was thus closing the door to another rate hike, Christine Lagarde stressed that the institution’s next decision would depend on “economic data”, especially the assessment of the inflation outlook, in light of the economic and financial data that has become available. dynamics of core inflation and the strength of the impact of monetary policy.

“We cannot say that we have reached the peak,” he said, adding that “future decisions of the Board of Governors will ensure that key interest rates are set at fairly restrictive levels for as long as necessary,” he confirmed.

Lagarde said the institution’s next decision will depend “on economic data,” particularly the assessment of the inflation outlook, the dynamics of core inflation and the strength of the monetary policy transmission.

The ECB today announced a 25 basis point hike in three interest rates.

Thus, the interest rate applicable to main refinancing operations (the rate that banks pay when receiving loans from the ECB for a period of one week) increases to 4.5%.

The interest rates applicable to the standing liquidity facility (the rate at which banks can obtain liquidity from one day to the next from the Eurosystem, i.e. at a higher cost than weekly loans), and the interest rates on the standing deposit facility (the rate , under which banks can place overnight deposits in the Eurosystem) increased to 4.75% and 4% respectively.

When the ECB changes key interest rates, it is reflected throughout the economy, with the most visible aspects being bank loans, market level loans, housing loans, interest rates on bank deposits, etc. and other investment instruments.