The European Central Bank is likely to raise its deposit rates outside the negative territory by the end of September and raise it further, ECB President Christine Lagarde said on Monday.
“Based on the current outlook, we may be in a position to come out of negative interest rates by the end of the third quarter,” Lagarde said in a blog post published on the ECB’s website, and as reported by Reuters.
“If we see inflation stabilizing at 2% in the medium term, a progressive further normalization of interest rates towards a neutral rate would be appropriate,” Lagarde added, even opening the door to a rate hike “if the eurozone economy overheats.”
The ECB’s deposit rate is currently -0.5%, which means banks are charged for keeping cash in the central bank.
The euro rose 0.9% to 0 1.0663 on Monday, but has sunk more than 6% so far this year.
See also: The euro hit the dollar vs. parity this year, Europe’s largest fund manager says
Vincent Mortier, chief investment officer at Amundi, Europe’s largest fund manager, said earlier this month that the single currency could balance the dollar against the dollar in six months amid fears of a recession for the region. Russia’s invasion of Ukraine has complicated the post-Kovid economy, which has pushed up the price of fuel and other commodities.