PARIS (Reuters) – Economic data points to the need for the European Central Bank (ECB) to raise interest rates again in May, ECB chief economist Philip Lane said in an interview with the World published Tuesday on the daily’s website.
“For the next meeting on May 4, the current data indicates that interest rates will have to be raised again. It is not yet the time to stop,” said Philip Lane, recalling the ECB’s desire to get closer “within a reasonable time” to its inflation target of 2%.
“Beyond May 4, I don’t have a crystal ball, we will depend on economic data,” adds Philip Lane. “But the analysis suggests that it would not be appropriate to keep our deposit rate at the current level of 3%.”
Echoing the words of ECB President Christine Lagarde, the institution’s chief economist stresses the importance of European governments reducing aid to businesses and households in the face of rising energy prices , saying they see it as an additional asset in the fight against inflation.
“Governments decided on their subsidy programs when gas prices were very high. Faced with their decline, we logically recommend that governments reduce subsidies,” he explains.
“If fiscal policies practice less stimulus, inflationary pressures will be less over the next few years,” he continues. “As a result, inflation will return to the 2% target more quickly, and this will prevent interest rates from having to rise more than necessary.”
(Written by Jean Terzian)
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