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ARCHIVED - European Central Bank will not raise interest rates in 2022
The ECB believes the electricity market and supply crisis will stabilise next year
The president of the European Central Bank (ECB) Christine Lagarde announced on Thursday December 16 that it is highly unlikely that interest rates will be increased in 2022, but has not fully ruled out the possibility that borrowing costs could rise. As inflation continues to spiral across the globe, the Bank of England has already implemented an interest rate hike for the first time since 2018.
Ms Lagarde has reiterated that the position in the economic cycle of the euro zone differs from that of the UK, and that the Bank will be “guided by the data” while attempting to keep rates at 0%.
The president has also stressed her confidence that 2022 will bring price stability in the electricity market, that consumption will normalise and price pressures related to supply chain bottlenecks will ease.
Last month the Bank of Spain argued against a national increase in wages, cautioning that such a move could drive costs up even further, but the ECB has dismissed this concern about a self-fulfilling spiral of inflation.
“We do see wage growth next year potentially rising somewhat more than this year, but the risk of second-round effects remains limited”, Ms Lagarde said.
Mr Lagarde’s optimism for the future is not without cause, as the euro zone has experienced solid economic growth this year, with the gross domestic product (GDP) growing by 3.7% year-on-year.
Image: Christine Lagarde
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