Christine Lagarde, President of the European Central Bank (ECB), said ECB is data dependent and will decide on rate hikes later after a 50 basis points hike in March.
"Since July (2022), we have hiked interest rates at a pace and size that is unprecedented. Interest rates are the most efficient tool in the present circumstances. There is every reason to believe that we will do another 50 basis points in March. After that, we will see. We are data-dependent," Lagarde said in an interview with The Economic Times (ET).
She added that more hikes will be done if necessary to return inflation to our target of 2 percent in a timely manner and she wants inflation to return to 2 percent and stay there sustainably.
"I don't have a timeline. I have an objective, which is our target. We need to raise interest rates to a level that is sufficiently restrictive to return inflation to 2 percent, and to keep rates there for as long as necessary to be confident that inflation returns to 2 percent in a timely manner," said Lagarde.
Lagarde said inflation, largely as a result of higher energy prices and supply bottlenecks, was expected to be transitory earlier but the Ukraine war rarified the supply of oil and gas and the price increases.
Besides, the surge in demand after the pandemic also contributed to the rise in inflation.
"We went from Covid lockdown with reduced activity to the reopening of the economy. You suddenly wanted to go to the restaurant or to the bar with friends. There was a surge in demand which was met by restrained supply," Lagarde told ET.
Talking about the Indian economy, Lagarde said India has done much better than others around the world.
"If you look at the GDP figures, if you look at unemployment, which has increased but not in dramatic ways, I would say that there has been continued progress," Lagarde said.
Lagarde said the G20 presidency is an opportunity for India to draw on its own experience in the field of digitalisation, digital currency, and regulatory environment for cryptocurrencies and to push that agenda on a universal basis to bring some sanity into this particular sector.
Disclaimer: This article is based on an ET interview. The views and recommendations given in this article do not represent the views of MintGenie.