London, Monday, 20 June 2022
The governor of the European Central Bank announced on Monday that the bank plans to raise the interest rate by 25 basis points in July.
Christine Lagarde, speaking at the European Parliament, indicated the bank could raise rates again in September.
"This rate rise will be calibrated based on the new medium-term inflation projection," she continued.
Higher energy prices, supply chain interruptions, and uncertainty, according to Lagarde, are "dampening" Eurozone business. She did add, though, that the service sector helps the economy expand.
She said that, while Eurozone inflation was at 8.1 percent in May, oil and food costs in the region were up 39.2 percent and 7.5 percent on an annual basis in May, respectively, due to the Russia-Ukraine conflict.
She stated that the region's annual inflation rate is expected to be 6.8% in 2022, 3.5 percent in 2023, and 2.1 percent in 2024.
"In keeping with our commitment to a 2 percent medium-term inflation objective, the rate at which we alter our monetary policy will be determined by the incoming data and our assessment of inflation's medium-term development," Lagarde added.
(Report by: The Decision Maker – Finance editors)