ECB President Christine Lagarde believes that keeping interest rates at the current level will help bring inflation back to the 2 per cent target.
The European Central Bank (ECB) decided to keep its three key interest rates at the 4 per cent level
at its latest monetary policy meeting. For Christine Lagarde, president
of the ECB, keeping interest rates at the current restrictive level is a
"significant contribution to bringing inflation back to our 2 per cent target"."We'll
see how everything evolves month by month, but our focus now is on
keeping interest rates at this level for as long as it takes to achieve
Further interest rate rises are possible in the future, due to pressures from the Middle East on oil prices, but at the moment it is "clearly premature" to talk about reducing the key interest rates, says ECB vice-president Luis de Guindos.
In October, inflation in the Eurozone fell to 2.9 per cent, close to the ECB's medium-term inflation target of 2 per cent.
Another of the ECB leader's main objectives is to keep the deposit rate at 4%, a level she considers "sufficient to control inflation". The monetary authority may, however, consider increasing borrowing costs if necessary, she said.
Christine Lagarde believes that armed conflicts may create a need to "review monetary policy",
particularly the conflict in the Middle East, which could lead to a
rise in the price of oil and thus affect the fall in inflation.
Luis de Guindos explained.
Last year, inflation in the Eurozone stood at 10 per cent and has evolved "globally positively" so far
standing at 2.9 per cent, said the ECB vice-president, pointing out
that it is necessary to be "prudent and cautious" due to the risks
associated with inflation expectations for the coming months.