ECB President Signals Upcoming Additional Interest Rate Hikes

• The ECB President suggests that more rate increases are on the horizon.
• On June 15 and 16, the FOMC will decide on the interest rate in the U.S.

In a speech on Thursday, European Central Bank President Christine Lagarde indicated that additional interest rate rises were likely throughout the continent since it is not yet clear that core inflation in the eurozone has peaked.

In a lecture given Thursday in Hanover, Germany, Lagarde said, “There is no clear evidence that underlying inflation has peaked.”

Eyes Achieving 2% Inflation Goal

Shortly after statistics revealed that inflation in the 20-nation eurozone dropped significantly last month, the central bank’s president spoke, signaling that the hardest monetary-tightening campaign of the euro period may soon come to an end. Lagarde, however, has said that this is not currently the case, suggesting that more rate increases are on the horizon.

Based on current pricing pressures, it seems that at least one more rate increase will be necessary to achieve the 2% inflation goal. On Wednesday, ECB Vice President Luis de Guindos remarked, “could not say that the victory is there so far.” More than one extra quarter-point rate change is probable, according to Madis Muller, another rate-setter.

The head of the European Central Bank has said that monetary policy is being conveyed “forcefully” to credit, and that the action done to date is still having a major influence, despite the fact that authorities aren’t happy with the inflation forecast.

On June 15 and 16, the Federal Open Market Committee (FOMC) will convene to discuss potential future interest rate increases in the United States. The consensus among experts is that the current cycle of interest rate increases has one more increase to come.