ECB De Cos: Current interest rates should enable inflation to reach 2% target
Pablo Hernandez de Cos, a member of the European Central Bank’s Governing Council, expressed confidence that the current interest rates in the euro zone would lead to the achievement of the European Central Bank’s 2% inflation target. Speaking at a conference in Madrid on Monday, de Cos stated that maintaining interest rates at their current levels for an extended period would increase the likelihood of reaching the target.
“If we keep interest rates at this level for long enough, then there is a good chance that we will reach the 2% target in time,” de Cos said. He emphasized the importance of this approach to avoid both under-tightening, which could hinder the achievement of the inflation target, and over-tightening, which could harm economic activity and employment.
The European Central Bank has recently concluded its campaign of 10 consecutive interest rate hikes. The focus now shifts towards maintaining borrowing costs high to suppress consumer price growth. The current benchmark interest rate stands at 4%.
While de Cos remains optimistic about achieving the inflation target, caution is advised in the financial community. As per a disclaimer at the end of the article, the content, data, and tools provided should not be considered investment advice and are for reference only. Investors should be aware of the risks associated with the stock market and exercise caution when making investment decisions.
It remains to be seen if the current interest rates will indeed bring inflation in line with the European Central Bank’s target. Economic indicators and future policy decisions by the European Central Bank will play a crucial role in determining the trajectory of inflation in the euro zone.