The president of the European Central Bank (ECB), Christine Lagarde, said in an interview released this Monday that she hopes that banks will reflect the interest rate increases made by the institution in the remuneration of their clients’ deposits.
In the interview with The Economic TimesLagarde indicated that the ECB will continue to raise the price of money to contain inflation in line with the medium-term target of 2%.
“We want our interest rate hikes to be passed on to the financial sector, including the banks. My hope is, because we want monetary transmission to be channeled through the economy, that banks will also reflect those interest rate hikes in their remuneration of deposits”, stressed Lagarde.
The ECB president’s message goes to the large banks in the euro zone, which are reflecting high interest rates on loans, but updating the remuneration of deposits much more slowly. The latest data on average deposit rates, for December, placed Portugal at the bottom of the list.
Very recently, some of the biggest banks operating in Portugal started to raise the rates on some deposits, but still in a very limited way.
As for the ECB’s monetary policy, the Frenchwoman recalled that the institution has been raising rates since last July at an unprecedented pace and size and reiterated that further increases will be made, if necessary, to bring inflation back to the target of 2% in useful time.
“It will take whatever it takes. What I do know is that we are going to bring inflation back to 2%. And we want to not only bring it back to 2%, but also keep it at that level in a sustainable way,” he said. , noting that interest rates are the most efficient instrument under current circumstances.
On the budgetary response, Lagarde insisted that governments must ensure that their support measures are temporary and target their support to those who need it most.
“Temporary, targeted and personalized. These are the three key principles”, summarized Lagarde.