‘Inflation is still too high’: European Central Bank to announce rate hike this month | Economy

“High inflation is putting pressure on people living in the eurozone,” Lagarde said. She emphasized that the price hike mainly hit low-income people, who spend a larger share of their income on food and energy.

Inflation in the eurozone was 6.1 percent year-on-year in May, but the European Central Bank chief says he still aims for an inflation rate of 2 percent over the medium term. “We will try to keep it at this level as long as necessary,” the Frenchwoman said during a meeting in Brussels. Inflation is still a multiple of that, which is slowing the economy.

In my view, it is by no means certain that inflation will peak this summer. Many interest rate steps are still needed

Claes Nott, Chairman of the Board of Directors of De Nederlandsche Bank

And so the head of the European Central Bank removed the last doubt: next Thursday at the next interest rate meeting, a new interest rate move will follow.

Joachim Nagel, President of the German Central Bank, added that it is by no means certain that the ECB will stop raising interest rates after July. That’s what Claes Nott, a colleague from De Nederlandsche Bank (DNB), seemed to hint at last month. In my view, it is not yet certain that inflation will peak this summer. “Several rate steps are still needed,” Nagel said.

Since last year, the European Central Bank has been trying to lower inflation by raising interest rates, which makes borrowing more expensive and slows the economy. The deposit rate at the European Central Bank is currently 3.5 percent.