European Central Bank (ECB) President Christine Lagarde said on Monday that the ECB is "likely to be in a position to exit negative interest rates by the end of the third quarter" after it ends the asset purchases "very early in the third quarter," which would allow the first rate hike at its next meeting in July.
"If we see inflation stabilizing at 2% over the medium term, a progressive further normalization of interest rates towards the neutral rate will be appropriate," Lagarde said, cautioning that the pace and overall scale of the adjustment cannot be determined in advance due to the high level of uncertainty. The speed of policy adjustment "will depend on how the shocks develop and how the medium-term inflation outlook evolves as we move forward," she stated and stressed the ECB will "take whatever steps are needed" to deliver 2% inflation over the medium term.
