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The European Central Bank won’t rush into raising interest rates and will pursue any policy tightening slowly, ECB President Christine Lagarde cautioned Friday.
Lagarde rattled bond markets last week by opening the door to interest rate hikes this year. Her comments prompted a notable shift in tightening expectations, with markets now pricing in a 50-basis-point increase in the ECB’s deposit rate by year-end.
“If we acted too hastily now, the recovery of our economies could be considerably weaker and jobs would be jeopardized,” Lagarde told the German media network Redaktionsnetzwerk Deutschland. Instead, when the economic data allow it, the ECB will “adjust — calmly, step by step — our monetary policy instruments,” she said.
That statement comes after the central bank’s chief economist Philip Lane argued in an ECB blog post on Thursday that eurozone inflation will come down “without a need for a significant adjustment in monetary policy.”
Source: Politico
