Brussels, (EFE).- The president of the European Central Bank (ECB), Christine Lagarde, warned this Wednesday in the European Parliament that economic activity will continue to be “weak” and confirmed that the issuer will raise interest rates another 50 basis points at their March meeting to bring inflation down.
“Although confidence is rising and energy prices have decreased, we expect (economic) activity to remain weak in the short term,” he told the plenary session of the European Parliament in a debate that takes place one day before the MEPs vote. the report in which they assess the performance of the ECB in 2022.
In her opening speech, the Frenchwoman pointed out that the eurozone economy “slowed down but did not come to a standstill” in the fourth quarter of last year, giving rise to a “better result than initially expected”, but she predicted, despite this, , a few months of slow growth.
And this despite the fact that “the risks to growth are now more balanced than they were in December” because, although Russia’s war in Ukraine “remains a significant downside risk”, the decline in energy prices will support activity and factors that would threaten to worsen inflation have also “balanced out”.
Despite this, the ECB president recalled that the first estimates point to inflation in the euro zone in January still at 8.5%, and this taking into account preliminary calculations for the rise in prices in Germany, so ” probably” will be revised slightly upwards.
“Inflation is too high. There are no doubts about that. And it is particularly hurting the most exposed, the most vulnerable and the least privileged,” she expressed.
In this context, he insisted that the ECB intends to “raise interest rates another 50 basis points at the March meeting” and then “evaluate the subsequent path of monetary policy.”
“Keeping interest rates at restrictive levels over time will reduce inflation by cushioning demand and will also protect against the risk of a persistent upward shift in inflation expectations,” he justified.
The increase in energy prices and other production costs during 2022 continues to affect consumer prices, explained Lagarde, who also remarked that the forces that push prices up remain “strong” and underlying inflation “remains high”. , at 5.2% in January.
Regarding this point, and in response to the interventions of some MEPs, the French also argued that the behavior of underlying inflation “is not only attributable” to energy prices, although “they have played and continue to play an important role”, but now they are accompanied by other costs.
He also stressed that wages are “growing fast” supported by “strong dynamics” in employment, while the main debate in the wage negotiations taking place in the eurozone is directed towards “how wages can somewhat regain ground with respect to inflation”.
“Despite most measures of long-term inflation expectations currently hovering around 2%, these measures warrant continued monitoring,” he added.