Lagarde: A quick turnaround in interest rates like in the US is not an issue for the ECB

Created: 01/20/2022, 11:01 am

The ECB is not planning to raise interest rates for the time being.

© Arne Dedert/dpa

The US Federal Reserve is heading towards an interest rate turnaround.

However, ECB President Christine Lagarde does not want to be put under pressure by this.

Paris – Despite the currently high inflation rate, a quick turnaround in interest rates* is out of the question for the ECB, according to its President Christine Lagarde.

The European Central Bank does not have to be as aggressive in monetary policy as the US Federal Reserve is likely to do, Lagarde told French radio station France Inter on Thursday.

"The cycle of economic recovery in the US is ahead of that in Europe," said the Frenchwoman.

"So we have every reason not to act as quickly and ruthlessly as one might imagine with the Fed." She assumes that prices will stabilize in 2022 and that there will be a gradual decline.

USA: Turnaround in interest rates likely as early as March

Financial markets are expecting the Federal Reserve to hike rates in March and up to three more hikes could follow this year.

However, Lagarde has repeatedly stressed that an interest rate hike in the euro area this year is very unlikely.

Inflation* in the euro zone surprisingly rose to another record high in December.

Driven by expensive energy, goods and services cost an average of 5.0 percent more than a year earlier.

Inflation is thus well above the ECB's target.

The central bank is aiming for a rate of 2.0 percent in the medium term.