2023-09-23 10:40:01
Christine Lagarde is still far from her objective of 2% inflation. (©ECB)
While the recent monetary tightening appears to mark the end of the rate hike cycle, inflation is still far from under control.
A new turn of the monetary screw at the same time as an implicit observation of powerlessness. The 25 basis point increase in the key rates of the European Central Bank (ECB), to 4% for the deposit rate, did not surprise observers.
However, this decision was not unanimous within the Governing Council, with some of its members having spoken out in favor of the status quo, President Christine Lagarde acknowledged during her press conference. By all appearances, this increase should mark the end of the cycle of monetary tightening that began in July 2022. Since then, interest rates have increased by 4.5 basis points, reaching their highest level since the creation of the euro.
Even if the ECB does not explicitly exclude a new gesture in the future, it considers that the current rates, “maintained for a sufficiently long period, will strongly contribute to the return of inflation to the target level as soon as possible” .
Recent price acceleration
But the expression “as soon as possible” is obviously open to question. With current interest rates, we wonder how long it should take before inflation returns to the 2% target set by the central bank. Certainly, monetary tightening has already started to have its effects on the economies of the euro zone. Credit growth tends
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