Today, the head of the European Central Bank, Christine Lagarde, made a speech at which she announced the further need to tighten monetary policy. Such a proposal is due to the persistence of inflation in the eurozone at too high a level. In general, since July last year, the ECB has raised its key interest rate by 375 basis points and promised another increase in June, despite the fact that inflation in May fell more than expected – to 6.1% from 7.0% in April. At the same time, Lagarde noted that the growth rates of consumer prices in the region will remain high for a very long time. The head of the regulator also added that the central bank still has space to raise the rate to an adequate limiting level. However, it is still unclear how significantly this aggressive tightening of the monetary policy will affect the European economy. «The labor markets in the eurozone are still in deficit, and workers have a fairly strong position in wage negotiations,» Lagarde said. According to some economists, the inflation data released on Thursday signal the likelihood of the end of the rate hike cycle in June. However, investors still expect two more rate hikes.
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