The ECB has raised its benchmark rate from minus 0.5% to 3.75% in one year — the fastest such pace since the euro was launched in 1999.
Federal Reserve Chair Jerome Powell, European Central Bank President Christine Lagarde, and Bank of Japan Governor Kazuo Ueda take a break outside while attending the Kansas City Federal Reserve Bank's annual Economic Policy Symposium in Jackson Hole, Wyoming, August 25, 2023.Interest rates in the European Union will need to stay high "as long as necessary" to slow still-high inflation, Christine Lagarde, president of the European Central Bank, said Friday.
Most of Lagarde's speech focused on disruptions to the global and European economies that might require higher rates for longer than was expected before the pandemic. Those challenges include the need to boost investment in renewable energy and address climate change, the rise in international trade barriers since the pandemic and the problems created by Russia's invasion of Ukraine.
The double blow of still-high inflation and rising rates has pushed Europe's economy to the brink of recession, though it eked out a 0.3% expansion in the April-June quarter from the first three months of the year.on whether the ECB would raise rates at its next meeting in September, though many analysts expect it to skip a rate hike because of the economy's weakness.
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