Faced with inflation, the European Central Bank decides on a historic increase in its interest rate – Le Monde

Christine Lagarde, European Central Bank (ECB) president addresses a news conference following the ECB’s monetary policy meeting in Frankfurt, Germany, September 8, 2022. REUTERS/Kai Pfaffenbach REFILE – QUALITY REPEAT KAI PFAFFENBACH / REUTERS Save who can at the European Central Bank (ECB)! The monetary institution increased, Thursday, September 8, its deposit rate by 0.75 points at once, to 0.75%. During its history, the ECB had only achieved such a rise during its very first meeting, in 1999. At the time, it was essentially a technical decision, to set up the single currency. This time there is fire. Inflation in the euro zone stood at 9.1% in August (year-on-year), while its objective is to keep it around 2% over the long term. Read also: Article reserved for our subscribers The weakness of the euro, symbol of an economy in full slowdown “Inflation is much too high and will probably remain so for an extended period”, underlines Christine Lagarde, its president. During her hour-long press conference, the guardian of the euro said and repeated her “determination” to bring inflation down to 2%. It therefore announces that this Thursday’s increase is only the beginning. “At our next meetings (which take place every six weeks), we plan to raise interest rates further. Ms. Lagarde systematically specified that the next increases will not necessarily be 0.75 points each time, and that the situation will be systematically reassessed, but the trend is clear: by the end of the year, the rate The ECB’s deposit rate, which was negative between June 2014 and July this year, is likely to be close to 2%. You have to go back to 2008 to find such a level. Read also: Article reserved for our subscribers Inflation: the central bankers in charge This is the end of an era, as Ms. Lagarde reminds us. “My predecessors had spent their time fighting against deflation. That is why we had set negative interest rates. It has been years since we fought inflation. The President of the ECB implicitly recognizes that the current challenge involves the credibility of the institution she leads. ” At the end, [celle-ci] will be judged on our ability to bring inflation back to its 2% target or not. Over the past year, the Governing Council of the ECB has seemed constantly overwhelmed by the reality of rising prices. In December 2021, Ms. Lagarde again announced that a rate hike this year was “unlikely”. In June, same thing: the announcements of the ECB turned out to be obsolete in a few weeks. The monetary institution then took the unusual decision to announce, a month in advance, a 0.25 point increase in its rate for July. Finally a month later it was 0.5 points. “The ECB is giving a negative signal to companies, pushing them to cut investment and hiring” Nicolas Goetzmann, head of macroeconomic strategy at La Financière de la Cité. You have 47.25% of this article left to read. The following is for subscribers only.