Friday, June 10 2022

European Central Bank President Christine Lagarde addresses a news conference following the Monetary Governing Council meeting in Frankfurt, Germany March 10, 2022. Daniel Roland/Pool via REUTERS

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LJUBLJANA, May 11 (Reuters) – The European Central Bank is expected to end its bond-buying stimulus program early in the third quarter of this year, followed by a rate hike that could come “within weeks” later, said ECB President Christine. Lagarde said Wednesday.

Lagarde was cementing market expectations that the ECB would raise its key rate for the first time in more than a decade in July in a bid to rein in record eurozone inflation – the result of soaring oil prices. energy that affects other goods.

Most other major central banks have already raised borrowing costs, but the ECB, which had fought too-low inflation for a decade, continues to inject liquidity into the financial system through bond purchases.

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“I expect them to be concluded at the beginning of the third quarter,” Lagarde told a conference in the Slovenian capital.

“The first rate hike, informed by the ECB’s forward guidance on interest rates, will take place some time after the end of net asset purchases… (and) that could mean a period of just a few weeks .”

She joined a growing number of ECB policymakers calling for a hike in July after inflation hit 7.5% in the eurozone last month and even measures that eliminate food and oil prices energy exceeded the ECB’s 2% target.

“What started as a one-off shock has now become a more widespread phenomenon,” ECB policy chief Bostjan Vasle said at the same event. “When circumstances change, the political response must follow,” added the Slovenian governor.

ECB board member Frank Elderson also said earlier on Wednesday that the ECB may consider raising rates in July, a move also advocated by Bundesbank President Joachim Nagel, among others. Read more

Estonian Governor Madis Mueller said the ECB’s bank deposit rate, which is currently -0.5%, could exceed zero by the end of the year for what would be the first time since 2014. find out more

“Even if we move up in 25 basis point increments, we could hit a positive rate by the end of the year,” he told Reuters in an interview.

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Reporting By Balazs Koranyi; Written by Francesco Canepa in Frankfurt; Editing by Toby Chopra

Our standards: The Thomson Reuters Trust Principles.


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