Lagarde, in her statement following the Eurozone finance ministers’ meeting held in Santiago de Compostela, Spain, expressed that recent data projected growth below expectations. However, she mentioned that they expect growth to pick up in the year 2024.
The ECB President emphasized the importance of ensuring that monetary and fiscal policies do not contradict each other for inflation control and price stability. She highlighted the significance of reducing public debt and current account deficits, calling on Eurozone countries to continue their efforts in this direction.
Green and Digital Sectors Require Investment
Lagarde emphasized the need for more investment, especially in green energy and digital transformation. She stated that European countries should focus more on innovation and sustainability efforts in these areas.
ECB Interest Rate Hike and Market Expectations
The ECB President clearly stated that reducing interest rates is not on the ECB’s agenda. He emphasized that this topic has not been discussed or even mentioned yet. He reminded that the ECB has recently decided to raise interest rates.
The ECB has raised three key policy rates in recent times, increasing the refinancing rate to 4.50%, the deposit rate to 4%, and the marginal lending rate to 4.75%. These increases have reached the highest levels since 1999 and 2001. Markets, however, have started to anticipate that the ECB’s rate hike cycle has come to an end, and there is an expectation that interest rates could decrease in the first half of 2024.