The deposit rate in the euro area is currently minus 0.5 percent.
(Photo: Reuters)
Ljubljana ECB President Christine Lagarde is preparing the financial markets for the scenario of an interest rate turnaround in July. Bond purchases are likely to be phased out early in the third quarter, followed by a rate hike that could possibly come “a few weeks later,” the Frenchwoman told a conference in Slovenia on Wednesday.
Recently, the voices from the management level of the European Central Bank have increased, urging an early end to the ultra-loose monetary policy.
In view of the record inflation in the euro area, the head of the Bundesbank, Joachim Nagel, is also urging action. It is important to act quickly to avoid second-round effects such as prices and wages escalating and inflation expectations getting out of control.
The deposit rate in the euro area is currently minus 0.5 percent. This means that banks have to pay penalty interest if they park excess funds with the central bank. The key interest rate is currently 0.0 percent. The next interest rate meetings of the ECB are scheduled for June 9th and July 21st. After that, the Governing Council of the ECB will not meet again for a regular monetary policy meeting until September.
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