ECB's Lagarde Reveals Lengthy, In-depth Discussion on Possibility of Rate Hikes

Christine Lagarde, President of the European Central Bank (ECB), revealed that a lengthy and in-depth discussion was held during the recent monetary policy meeting regarding the possibility of further interest rate hikes. The ECB held its monetary policy meeting on March 30 (local time) and decided to keep the deposit rate at 2.00%, the main refinancing operations rate at 2.15%, and the marginal lending facility rate at 2.40%. Lagarde explained that the recent tightening of financial conditions played a role in the decision to freeze rates.

Lagarde analyzed that rising energy prices due to the Middle East conflict are pushing up inflation and weakening economic sentiment. She noted that the longer the war lasts, the greater its impact on inflation and the economy. She stated that even if the war ends in the short term, it would be difficult for the negative supply shock effects to disappear immediately due to reasons such as infrastructure, logistics, and time differences.

The ECB believes it can bring inflation back to its target of 2.0%.