Borrowing costs

Lagarde hints at pause after latest ECB rate rise

ECB officials see inflation falling

European Central Bank president Christine Lagarde hinted at a pause in the monetary tightening cycle after raising its interest rate to a 22-year high.

The central bank followed the US Federal Reserve in raising its benchmark rate by a quarter-point amid expectations that the Bank of England will raise rates by a similar amount next week and at its meeting in September.

Easing inflation has enabled policy makers to impose lower incremental rises in rates. The Fed raised borrowing costs to a range of 5.25-5.5% in what could be one of its final moves this year.

The ECB voted for its ninth consecutive increase since last July, when rates were below zero, taking the rate to 3.75%.

The ECB governing council said it expected inflation to drop further over the remainder of the year but stay above its 2% target for an extended period.

Ms Largarde told a press conference: “There is the possibility of a hike [next time]. There is the possibility of a pause. It’s a decisive maybe.”

The euro fell by about 1% against both the dollar and the pound, reversing earlier gains in the aftermath of the decision.

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.