“We’ve had a long journey in the last nine months and we’re continuing it. It’s a journey and we haven’t reached our destination yet,” said Christine Lagarde, according to the daily Le Figaro, immediately after the ECB Governing Council announced the increase in the benchmark interest rate by 0 .25%. Thus, starting from May 10, the interest rates of the main refinancing operations, the marginal loan instrument and deposits will be 3.75%, 4.00% and 3.25%.
“Our future decisions will ensure that monetary policy rates are brought back to sufficiently restrictive levels to achieve a return of the inflation rate to the average target of 2% over time (…). We will continue to apply a data-driven approach to determine the appropriate level and duration of the restrictive model. (…) Business and consumer confidence have steadily recovered in recent months, but remain weaker than before Russia’s unjustified war against Ukraine. (…) We see differences in the economic sectors. The manufacturing sector is overcoming the blockage of orders, but its prospects are getting worse. The service sector is getting stronger, especially thanks to the reopening of the economy,” stressed Lagarde, according to statements posted on the ECB’s website.
The president of the ECB urged the states of the European Union to gradually give up the support measures granted due to the energy crisis, “to avoid the acceleration of inflationary pressures in the medium term”, “which would require a stronger monetary policy reaction”.
“Fiscal policies must be oriented towards making our economy more productive and towards the gradual reduction of large sovereign debts. Policies towards the intensification of supply capacities in the euro area, especially in the energy sector, can also contribute to reducing price pressures in the long term environment. From this point of view, we welcome the publication by the European Commission of the legislative proposals for the reform of the economic governance framework in the European Union, which should be finalized soon”, emphasized Christine Lagarde.
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