"Cruise altitude" is approaching. We are "on the final stretch". With these two expressions, the president of the ECB, Christine Lagarde, and the vice-president of the institution, Luis de Guindos, described yesterday during their interventions the moment of monetary policy. The interpretation is that interest rate hikes are close to ending and those remaining will be applied in doses of 0.25 points.
"We are now approaching our cruising altitude and that means we have to continue ascending more gradually, using the speed we have already gained," Lagarde said yesterday at a conference in Frankfurt.
Since July, the ECB has raised interest rates from 0% to 3.75%, in the fastest escalation during the institution's 25 years of existence.
“In the beginning, you need to climb steeply and accelerate with speed. But when it approaches the target altitude it can reduce the acceleration and retain the flight speed”, continued Lagarde. Now the key is to "climb high enough to reach the goal, but not so high as to surpass it".
At the last meeting, in May, the ECB agreed to raise interest rates by 0.25 points, compared to the rate of 0.5 points applied until then. He agreed after detecting the first signs of moderation in inflation, which continues at "high levels", despite the fact that the latest data from Spain, France and Germany are better than expected.
Lagarde's speech was not without the usual and well-measured ambiguity, although it can be inferred that there will be at least a further 0.25 point rise in interest rates and that, from this point on , the reference could experience few alterations. Analysts expect rates to reach 4% or 4.25% this year.
In an interview with RNE, Luis de Guindos confirmed the message. There will no longer be increases of 0.5 points because 0.25 points are "the new norm". Added to this is the fact that the ECB is now at the "end straight" of the current monetary policy. "There is the perception that a large part of the road of climbs has been carried out and the last part remains, the final stretch", he affirmed.
