“If necessary, we can deploy new instruments against fragmentation risks in the euro area”, based on the principles of optionality and flexibility. This is what Christine Lagarde, number one of the ECB, said in the press conference that followed the announcement of the Eurotower on the next monetary policy moves.
Faced with galloping inflation also in the euro area, the ECB is preparing for an epochal turning point, destined to sweep away, in particular, the two pillars on which its strategy is based: negative rates (the rate on deposits still remains equal to -0.50%) and Quantitative easing, or the monetary bazooka with which the ECB bought up BTPs, Bunds and other public debt securities and, in general, other assets of the euro countries.
In the press release announcing the decision to leave the interest rate on the main refinancing operations and the interest rate on the marginal lending facility and the line of deposit, the European central bank announced a 25 basis point hike in interest rates in July, adding that it expects to raise rates in September as well.
“Looking further, the Governing Council of the ECB plans to raise key interest rates again in September. The extent of this rate hike will depend on the update of the medium-term inflation outlook.”