The significant tightening of monetary policy must be continued in order to tame inflation.
European the governor of the central bank Christine Lagarde according to the news agency Agence France-Presse (AFP), the state of the eurozone economy is much better than previously anticipated.
The CEO said Thursday at the World Economic Forum in Davos, according to AFP, that there has been a lot of positive news about the economy in recent weeks.
“Next year will not be great, but it will be much better than we had feared,” CEO Lagarde said, according to AFP.
The central bank according to the forecast published in mid-December, the economy of the euro area would grow by 0.5 percent this year.
At that time, Director General Lagarde estimated that the economy of the euro area contracted in October–December last year and will continue to contract in the current quarter.
The state of the euro area economy inevitably affects Finland as well, as 40 percent of the value of goods exports goes to euro countries.
According to AFP, on Thursday, CEO Lagarde stressed once again that the increase in consumer prices, i.e. inflation, is still too fast in the euro area. The CEO also hinted that the significant tightening of monetary policy will continue. That would mean raising key interest rates by 0.50 percentage points.
“We will stay the course,” Lagarde said, according to AFP.
In December, he hinted at several 0.50 percentage point rate hikes this year.
In December, inflation in the euro area was 9.2 percent, while according to the central bank’s price stability goal, it should be two percent in the medium term.
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