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  • By The Financial District

European Central Bank Unclear When It Will Raise Interest Rates

The head of the European Central Bank (ECB) reiterated Thursday, April 14, 2022, that the bank would raise interest rates “some time after” ending its pandemic stimulus efforts later this year, sticking to a gradual path even as the United States, United Kingdom and other countries take a harder line to combat soaring consumer prices, the Associated Press (AP) reported.

Photo Insert: Bank President Christine Lagarde previously opened the door a crack for an interest rate increase this year.

People in the 19 countries that use the euro currency have seen costs increase for everything from food to fuel as inflation rose to an annual rate of 7.5% last month, the highest since statistics began in 1997.

Driven by energy prices that have soared ever higher since Russia invaded Ukraine, record inflation has sharpened attention on when the ECB will take more drastic steps to control excessive price increases for consumers.

The bank said recent economic data confirmed its expectations of ending its pandemic stimulus efforts later this year and that the exact timing would depend on the economic situation.

Bank President Christine Lagarde, who previously opened the door a crack for an interest rate increase this year, said “we are sticking to our sequence,” with any rate hike following the end of the bond purchases meant to support the economy during the COVID-19 pandemic.

All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

That could mean “anywhere between a week and several months,” Lagarde said, before the bank could decide on “an interest rate hike and subsequent hikes.”

Speaking by video news conference after testing positive for COVID-19 last week, Lagarde stressed the uncertainty over the war and the bank’s willingness to stay flexible in adjusting its policies, saying the experience with pandemic stimulus purchases showed “flexibility served us well.”

Banking & finance: Business man in suit and tie working on his laptop and holding his mobile phone in the office located in the financial district.

She noted that inflation “will stay high in the near term and then moderate to some extent” amid uncertainty from the war. While higher energy prices were fueling inflation, weaker growth could lower the price pressures in the economy, Lagarde said.

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