European Central Bank (ECB) President Christine Lagarde made a statement after the meeting of the finance ministers of the Euro Zone countries in Santiago de Compostela, Spain.
Pointing out that the latest data reveal that the Eurozone will not grow as much as previously expected this year, Lagarde said that growth will accelerate in 2024.
Lagarde stated that monetary and fiscal policies should not contradict each other in order to control inflation and ensure price stability.
Pointing out the importance of Eurozone countries focusing on reducing public debt and current account deficit at this stage, Lagarde said that European countries need more investments, especially in green and digital areas.
Lagarde stated that reducing interest rates was not on the ECB’s agenda and said, “We did not decide to reduce interest rates. We did not discuss this issue and did not even mention it.” he said.
Yesterday, the ECB decided to increase the 3 main policy rates by 25 basis points, increasing the refinancing rate to 4.50 percent, the deposit rate to 4 percent and the marginal funding rate to 4.75 percent.
With this increase, the ECB’s deposit and refinancing rates reached their highest levels since 1999, and the marginal funding rate since 2001.
Markets had expected that the ECB’s interest rate hike cycle might be over and interest rates might decline in the first half of 2024.