The European Central Bank (ECB) may start lowering interest rates this summer, said the governor of ECB Christine Lagarde on Wednesday, the 17th of January, commenting that everything will depend on the latest economic data.
In an interview to Bloomberg during the World Economic Forum in Davos, Lagarde was asked to comment on hints given by members of the ECB’s Governing Council that the bank could start reducing interest rates this summer.
“I’d also say it’s very plausible,” she said. “But I have to maintain reluctance, because everything depends on data and there is still uncertainty, as well as some of the indexes still have not stabilised on a level we would like to see.”
The latest data from Eurostat indicate that inflation in Eurozone was 2.9% in December, which remains above ECB’s established 2% goal.
Lagarde said that inflation “is on the right track”, but it is too soon to celebrate victory.
She stressed that energy prices and possible supply disruptions are the main risk factors.
Last week Lagarde announced that interest rates in Eurozone have reached their peak level after their significant increase in attempts to battle high inflation.
“We have reached the peak, and, short of another major shock, rates will likely stop going up,” Lagarde told French broadcaster France 2 in an interview.
As previously reported, in December ECB’s Governing Council assessed development outlooks for Eurozone economy for the next three years and made the decision to maintain interest rates unchanged.
At a meeting of ECB’s Governing Council in Frankfurt it was decided to maintain the rate of the main refinancing operations at 4.5%, the rate of the deposit facility at 4% and the rate of the marginal lending facility at 4.75%.
A flash estimate from Eurostat indicates that annual inflation in Eurozone was 2.9% in December as opposed to 2.4% in November.
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