ECB: “high probability” of a rate hike by the end of the year

“We look at inflation. (…) If the situation persists, as we think today, there is a good chance that the rates will be raised by the end of the year, ”declares the president Christine Lagarde.

European Central Bank (ECB) President Christine Lagarde sees a “high probability” that the institution will raise its key rates by the end of the year if inflation remains high, she said on Friday. during an interview on CNBC.

“We look at the inflation numbers. (…) If the situation continues, as we think today, there is a good chance that the rates will be raised by the end of the year”, she underlined.

Central banks around the world have largely started to raise their key rates, in an attempt to curb inflation which has been exacerbated by the war in Ukraine. The Frankfurt institution has so far refused to do so and is under pressure to also initiate the movement.

The ECB, however, wants to have first ended its net debt purchase program, which had supported the economy during the crisis caused by COVID-19.

The deadline for this program was set for the third quarter, and Ms. Lagarde said on Friday that there was a “strong chance” that it would be done “early” in the third quarter.

Thursday, she had assured that the moment would depend on economic indicators, responding to the vice-president of the institution Luis de Guindos, who had mentioned the month of July.

In the eurozone, inflation hit a record 7.5% in March, well above the ECB’s medium-term target of 2%.

In the sequence planned by the ECB, a rate hike – the first since 2011 – is supposed to occur “some time following” the end of debt purchases.