Christine Lagarde pointed out that the ECB will raise interest rates enough to reduce inflation.
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Director of the European Central Bank, Christine Lagarde she said price pressures were “strong” and pointed out that the ECB would raise interest rates enough to reduce inflation. Lagarde said that future decisions will ensure that benchmark interest rates are brought to levels that are restrictive enough to achieve a timely return of inflation to the medium-term target of two percent. She also stated that interest rates will remain at those levels for as long as necessary.
Debtors anxiously await the decision every month European Central Bank (ECB) on new interest rate corrections. Citizens of Serbia are not exempted from this because they are housing loans related to ECB interest rates. Since the beginning of the war in Ukraine, which started a serious economic crisis in the world, there was no good news regarding prices and interest. Christine Lagarde is a woman who is at the head of the European Central Bank for the first time since of the beginning of the crisis, says that interest rate growth could stop by the end of the year.
For a year and a half, the European Central Bank has been raising interest rates, and thus the installments of all borrowers who have loans in euros.
And in Serbia, at least as far as housing loans are concerned, they are almost the only ones. an integral part of the interest that is paid is Euribor, which is calculated on three-month or six-month level. Because of this, all eyes are on ECB President Christine Lagarde, impatiently awaiting the decision that interest rate hikes have been suspended.
Lagarde is, therefore, at the head of the institution that decides the fate of interest rate increases and loan installments. During the previous year and a half, the President of the ECB mostly used the word “uncertainty” in her speeches. In his last address on Sunday, however, Lagarde said that the euro zone after progress in the fight against inflation – approaching the goal of two percent.
Thus, speaking about the speculation that there will be a pause in the increase of interest rates from September, although partially unspecified, Lagarde nevertheless announced such a possibility, saying that “there may be another rate increase, or perhaps a pause”.
“A break, regardless of the date, in September or later, would not necessarily be definitive“, she said.
Economist Ljubomir Madžar explains for Nova.rs that the pause in the growth of interest rates means that they will be frozen at the level at which they were at the time of the decision. He points out that, nevertheless, the news is partly good because it is not known how long the break period would last, but also what would happen after it.
“For some longer periods, this announcement does not mean much to debtors, in the form of some longer planning of their finances“, says the economist. He states that the president of the ECB has not made promises that were not fulfilled later.
“Lagard did not say much about some promises, she mostly made decisions without a big announcement. So now he knows for sure that the situation in the central bank allows for a pause in the growth of interest rates in the near future,” says Madžar.
Otherwise, changes in interest rates, i.e. their increase, is used as a means of curbing inflation.
This means that their increase aims to make citizens less indebted and reduce consumptionwhich decreases the demand for products and services, which consequently lowers prices.
Reference interest rates are lowered in order to support economic growth, with cheaper borrowing and higher consumption. And the International Monetary Fund (IMF) advised the ECB in previous months to raise interest rates until the middle of 2024, and the finance ministers of the EU countries to implement a strict fiscal policy.
01:09 “THIS LOAN IS THE HARDEST TO PAY BACK!” Expert on variable interest rates: Recession is present in the most developed countries Source: Kurir televizija
Source: Kurir television