ECB likely to get out of negative rates by end-September, Lagarde says By Reuters

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© Reuters. FILE PHOTO: President of European Central Bank Christine Lagarde addresses a news conference following the meeting of the Governing Council’s monetary in Frankfurt, Germany March 10, 2022. Daniel Roland/Pool via REUTERS/File Photo

FRANKFURT (Reuters) – The European Central Bank is likely to raise its deposit rate out of negative territory by the end of September and could lift it further if it sees inflation stabilising at 2%, ECB President Christine Lagarde said on Monday.

“Based on the current outlook, we are likely to be in a position to exit negative interest rates by the end of the third quarter,” Lagarde said in a blog post published on the ECB’s website.

The ECB’s deposit rate is currently -0.5%, meaning banks are charged to park cash at the central bank.

“If we see inflation stabilising at 2% over the medium term, a progressive further normalisation of interest rates towards the neutral rate will be appropriate,” Lagarde added, even opening the door to raising rates further “if the euro area economy were overheating”.

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