MNI BRIEF: Rate Hike In July, NIRP Exit By End Q3 - Lagarde

Net purchases under APP should end "very early" in Q3, with an interest rate-lift-off in July, followed by an exit from negative interest rates by the end of Q3, European Central Bank president Christine Lagarde wrote in a blog post Monday.

Lagarde acknowledged that in the near term inflation and growth are moving in opposite directions. But with the inflation outlook "having shifted notably upwards compared with the pre-pandemic period, it is appropriate for nominal variables to adjust – and that includes interest rates (MNI SOURCES1: ECB Seen Making Two To Three 25-BP Hikes In 2022).

“This would not constitute a tightening of monetary policy; rather, leaving policy rates unchanged in this environment would constitute an easing of policy, which is not currently warranted.”