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Lagarde dismisses the following from the Fed: We're in very different positions - interest rates

Lagarde dismisses the following from the Fed: We’re in very different positions – interest rates

The president of the European Central Bank (ECB) has once again rejected calls to follow the example of the US Federal Reserve and the European Central Bank to be quicker in changing its monetary policy in response to rising inflation.

In an interview with French radio, Christine Lagarde argued that the central bank had “every reason” not to be quick or aggressive in responding to inflation. “We are in very different situations,” the European Central Bank chief stressed, adding that inflation in the eurozone is “clearly weaker,” with the region’s economic recovery still in a less advanced stage than in the United States.

The Fed should make its first rate hike in March, to contain inflation in the country, which is at its highest level in two decades. In Europe, the central bank has given indications that there should be no changes in interest rates in 2022, although debate within the institution over when to begin removing subsidies is growing.

Despite her refusal to pursue the Fed, Lagarde stressed, in the same interview, that the ECB is ready to act if conditions change.

Inflation was 5% in the Eurozone in December. A value that sets alarm bells in the area. However, the ECB remains convinced that the rise in the price index will return to normal levels to levels closer to the central bank’s target (2%).

Pablo Hernandez de Cos, a member of the European Central Bank’s Board of Governors, also told TVE this Thursday that, under current conditions, “an interest rate increase is not expected in 2022.”

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Even as many ECB members avoided interest rate moves, sovereign bond prices were rising in the region. The German “Bundes” returned to trade, this Wednesday, for the first time in three years above zero. The increase in debt interest is expected to continue throughout the year.