ECB: Lagarde evokes a possible 1st rate hike in July

The European Central Bank (ECB) might start raising interest rates as early as July, its president Christine Lagarde warned on Wednesday, as the euro zone faces soaring inflation.

The ECB “will first end” its net asset purchases “at the beginning of the third quarter”, i.e. July, then a first rate hike will take place “some time followingwards”, declared Ms. Lagarde, specifying that “ this might mean a period of only a few weeks’.

The monetary institute has planned to hold its next monetary policy meeting on June 9 in Amsterdam, then the next one on July 21 in Frankfurt before the summer break.

“After the first rate hike, the process of normalization will be gradual,” added Ms. Lagarde, which suggests more rate hikes to come following the first seed of the summer.

Within the ECB, the clan of ‘hawks’, supporters of a more restrictive monetary policy in the face of high inflation, is in a hurry to start the cycle of rate hikes.

‘While inflation in the euro zone continues to be high, we must act’, hammered Tuesday the president of the German Bundesbank.

And to recommend “a first stage of normalization of the interest rates of the ECB in July”, like Isabel Schnabel, member of the executive board of the institute, who declared it at the end of April.

In the eurozone, inflation hit a record 7.5% year on year in April, according to Eurostat, well above the ECB’s medium-term target of 2%.

/ATS