(ECB) The European Central Bank President Christine Lagarde says the monetary authority will lift the negative interest rates to zero by the end of September.
Lagarde says that the move reflects the current outlook, which necessitates ending the era of negative rates.
The ECB president stated that the central bank would engage in further progressive normalization of rates towards the neutral rate if inflation stabilizes at 2% over the medium term. The neutral rate defines an optimal level or around 1%-2%, where growth is sustained without reaching overheating levels.
Lagarde warned that the rates could be hiked above the neutral rate if the economy shows signs of overheating.
The comments by Lagarde come at a time the central bank is under pressure to end its loose monetary policy to tame record inflation rates. Investors are already warming up to a 0.25% rate hike in July.
Lagarde still warned that a gradual policy tightening was prudent as the central bank watches the impacts on the economy. She said that the high inflation was connected to supply shocks, which are showing signs of slowing down.
Markets react. DAX is up +0.78%, EURUSD is up +0.89%.
