ECB has more ‘space’ before first rate hike, says Lagarde

Christine Lagarde, president of the ECB, speaks at the Bank’s press conference in Frankfurt, Germany.

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FRANKFURT, March 17 (Reuters) – Facts European Central Bank On Thursday, ECB President Christine Lagarde said there was more “gap” between the expected end of money printing this summer and the first rate hike in more than a decade.

Investors increased their bets on higher ECB rates after Federal Reserve raises borrowing costs late on WednesdayTightening its stance for the first time since the start of the coronavirus pandemic and despite the uncertainty stemming from Russia’s invasion of Ukraine.

Central banks around the world have been caught by the rise in inflation, which hit 5.9% in the 19-country eurozone last month after spending most of the past decade below its 2% target. ECB.

However, in a repeat of last week’s message, Lagarde said that any increase in the ECB’s policy rate would be gradual and only come “some time” after the ECB’s bond-buying program them, will take place in the third quarter of the year with more financial conditions. turmoil.

“This maintains our traditional sequencing logic, but also gives us more space if needed after we stop buying bonds and before we take the next step towards normalization.” , she said at a conference in Frankfurt.

At the end of the year, money markets are pricing in an increase of nearly 50 basis points worth of the ECB’s deposit rate, which would bring it back to zero after eight years in the negative.

Lagarde added that the ECB could come up with new tools to ensure monetary policy hits all corners of the eurozone even as it eases bond buying.

These have helped to limit the spread between the borrowing costs paid by highly rated Germany and the borrowing costs of indebted nations such as Italy and Greece.

“If necessary, we can design and implement new tools to ensure the transmission of monetary policy as we go down the path of policy normalization, as we have shown,” Lagarde said. many times before”.

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