FRANKFURT – European Central Bank President Christine Lagarde said on Tuesday that she saw the ECB’s deposit rate zero or “slightly above” by the end of September, indicating an increase of at least 50 basis points from current levels.
The euro has risen against the dollar as his comments on market prices at risk of a big ECB rate hike this summer to fight record-high inflation.
In an interview with Bloomberg TV, Lagarde said: “We’re moving into a very positive territory at the end of the third quarter.”
Asked to clarify that comment, he added: “When you are out of the negative (bid) you can be in the void, you can be a little above zero. This is something that we will determine based on our assumptions and that forward direction. “
Lagarde said Monday that the ECB would be “out of negative rates” by the end of September, which many investors took for granted.
This was already seen as a significant change for a central bank that has not raised rates for more than a decade, charging banks eight years on their inactive cash, and this year has had everything but the cancellation of the rate hike.
The Money Market is now setting a price target of 110 basis points for the ECB’s September 14 meeting and the end of the year.
Eurozone inflation has been hovering higher than expected by the ECB for several months, hitting an all-time high of 7.4% in April and forcing the central bank to follow the global path of global peers such as the Federal Reserve.
But Lagarde insisted that the ECB would only move slowly because inflation was driven by supply – due to the war in Ukraine and the Kovid-related sanctions in China – citing more expensive fuels than rising demand.
“I don’t think we’re in a position to increase demand right now,” Lagarde said. “It’s definitely an inflation driven by the supply side of the economy.” (Reporting by Francesco Canepa; Editing by Andrew Hevens and Katherine Evans)