European Central Bank slows rate hikes but remains firm against inflation

European monetary policy remains guided by the fight against inflation. The European Central Bank (ECB) slowed the pace of its rate hikes on Thursday, May 4, but will maintain a restrictive monetary policy for as long as necessary to combat continuing inflation. “too high”. The main key rates were raised by 0.25 points, the seventh increase since July 2022 and the start of the unprecedented monetary tightening campaign in the euro zone.

Although this is the ECB’s most moderate gesture since it began its turn of the screw, it should not be inferred that the guardians of the euro are letting their guard down, warned Christine Lagarde, the president of the institution. “We don’t take a break” in the fight against inflation, she said at a press conference.

Objective: curb lending

Inflation in April sailed in the euro zone still well above the target of 2%, regaining 0.1 percentage point, to 7.0%, after months of slowdown, noted the guards of the euro. A significant slowdown is not expected in the short term, especially since “Wage pressures have increased further, with workers recovering some of the purchasing power they lost due to high inflation”, noted Christine Lagarde.

By making credit more expensive, the ECB wants to curb demand for mortgage loans, for consumption or for business investments and thus slow down the rise in prices. ECB interest rates are now in a range between 3.25 and 4%, the highest since October 2008.