European Central Bank (ECB) President Christine Lagarde delivered a speech on Thursday expressing her concerns over the current state of inflation within the euro zone. Despite recent data reporting a considerable slowdown in inflation last month, Lagarde remains unconvinced that its peak has been reached. Such uncertainty suggests further interest rate hikes may be imminent in the European market.
Lagarde’s comments reflect the ECB’s commitment to ensuring the 2% inflation target is met, indicating at least one more interest rate hike may be necessary. ECB Vice President Luis de Guindos echoed these concerns, indicating victory over inflation “is not there so far”. Colleague Madis Muller also expressed that more than a single quarter-point rate move is likely, suggesting a “considerable tightening is still in the pipeline.”
The ECB’s chief elaborated that while officials are not satisfied with the current inflation outlook, monetary policy is being “forcefully” transmitted to credit. This, in turn, heavily influences bank lending conditions. Lagarde explained, “These hikes are already feeding forcefully into bank lending conditions. And we know that – having hiked so far and so fast – considerable tightening is still in the pipeline.”
Meanwhile, the United States Federal Open Market Committee (FOMC) is set to convene on the 15th and 16th of June to discuss their own course of action regarding interest rates. Analysts predict at least one more interest rate hike in the current cycle, possibly aligning with ECB’s strategy.
As both European and American markets face the possibility of further rate hikes, investors should conduct thorough market research and remain aware of the potential impact on their investments. It is important to note that the author’s opinions are subjective to market conditions and may not accurately represent future outcomes. In times of uncertainty and market fluctuation, individuals should exercise caution and consider the potential consequences when deciding on their investments.
Source: Coingape
