The Strategist

ECB head calls for further tightening of monetary policy

06/02/2023 - 06:47

Additional monetary policy tightening is required because inflation is still too high, said Christine Lagarde, Head of the ECB.

European Central Bank
European Central Bank
Despite mounting indications that previous rate hikes are beginning to take effect, inflation in the euro zone is still too high, necessitating more monetary tightening, Christine Lagarde, president of the ECB, said on Thursday.

Despite recent indications showing May's inflation dropped more dramatically than anticipated, to 6.1 percent, the central bank has increased its benchmark interest rate by 375 basis points since last July and promised another increase in June.

According to Lagarde, inflation is too high right now and is likely to stay that way for a very long time.

Because of this, she continued, "we're raising rates at the fastest rate in history, and we've made it clear that there's still room to go up to a sufficient cap."

Lagarde noted that although the Bank is quickly raising rates and that more tightening of its policies is anticipated, it is still unclear how much of an impact this will have on the economy.