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- ECB's Lagarde: Conditions to raise rates very unlikely to be satisfied next year
ECB's Lagarde: Conditions to raise rates very unlikely to be satisfied next year
"In our forward guidance on interest rates, we have clearly articulated the three conditions that need to be satisfied before rates will start to rise," Christine Lagarde, President of the Europen Central Bank (ECB), said on Wednesday, per Reuters.
Key takeaways
"Despite the current inflation surge, the outlook for inflation over the medium term remains subdued, and thus these three conditions are very unlikely to be satisfied next year."
"We continue to use the PEPP to safeguard favourable financing conditions and ensure that borrowing costs for all sectors of the economy do not unduly tighten."
"Even after the expected end of the pandemic emergency, it will be still important that monetary policy – including the appropriate calibration of asset purchases – supports the recovery and the sustainable return of inflation."
"An undue tightening of financing conditions is not desirable at a time when purchasing power is already being squeezed by higher energy and fuel bills, and it would represent an unwarranted headwind for the recovery."
Market reaction
The EUR/USD pair edged lower from session highs after these remarks and was last seen trading flat on the day at 1.1580.
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