ECB ready to raise interest rates again

“Further normalization, adapt tools to stabilize inflation”

At its meeting on 21 July, the Governing Council of the ECB decided to raise the reference interest rates and approved the TPI. Further normalization of interest rates will be appropriate at forthcoming meetings. Future policy rate developments will continue to be data-dependent and contribute to achieving the 2% inflation target over the medium term. The European Central Bank writes this in its bulletin.

The Governing Council, Eurotower also reiterates, is ready to adapt all the instruments within its mandate to ensure that inflation stabilizes at the 2% target in the medium term. The new ICT will ensure the smooth transmission of the monetary policy stance across the euro area while the Governing Council continues to adjust this stance to cope with high inflation.

Anticipating the exit from negative interest rates, the ECB explains in the bulletin, allows the Governing Council to move to an approach in which rate decisions are made on a case-by-case basis. The future evolution of the reference rates as defined by the Governing Council will continue to be data-dependent and will contribute to the achievement of the 2% inflation target over the medium term.

The Governing Council, then reminds the Frankfurt institute, has approved the ICTY. It deemed its establishment necessary in order to support the effective transmission of monetary policy. In particular, as the Governing Council continues its normalization process, the ICTY will ensure that the monetary policy stance is transmitted in an orderly manner in all euro area countries. The uniqueness of the Governing Council’s monetary policy is a prerequisite for the ECB to fulfill its mandate to maintain price stability.

In compliance with the established criteria, the Eurosystem will be able to make purchases on the secondary market of securities issued in jurisdictions that exhibit a deterioration in funding conditions not justified by country-specific fundamentals, in order to counter, to the extent necessary, risks. for the transmission mechanism. The extent of the ICT purchases will depend on the severity of the risks to monetary policy transmission. Purchases, recalls the ECB, are not subject to ex ante restrictions.