The resurgence of inflation in the United States does not change the interest rate policy of the European Central Bank. European Central Bank President Christine Lagarde confirmed this to CNBC on Tuesday.
According to March data, inflation in the euro area was 2.4 percent, just 0.4 percentage points above the ECB's inflation target of two percent. But the ECB will not postpone interest rate cuts until the inflation target is reached, Lagarde said.
The deposit rate set by the ECB has been at a record level of 4.00 percent since September. The key interest rate remains at 4.5 percent. Long periods of high interest rates are seen as a risk of slowing economic growth.
Lagarde wants to reduce interest rates in a “reasonably short period of time.”
So far, the fight against inflation is going according to plan, Lagarde said. If this trend continues, the ECB will cut the interest rate in a “reasonably short period of time.”
“Unless we experience a development shock, we are approaching a time when we will have to weaken our restrictive monetary policy,” Lagarde said.
Hopes for interest rate cuts kickstarted stock market rally in late 2023
The prospect of an imminent reduction in interest rates in the US and the euro zone had already caused stock markets around the world to rise during the winter. Since then, unexpectedly poor US inflation data has dampened market euphoria somewhat.
Recently, the chairman of the United States Federal Reserve, Jerome Powell, announced that the fight against inflation would last longer than previously thought. “Recent data clearly have not given us greater confidence,” Powell said.
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