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ECB lifts key rates 25 bps at September meeting
The ECB’s move was made to keep inflation near its 2% price-stability goal, with Lagarde arguing it reflects the region’s economic resilience.
Christine Lagarde, President of the European Central Bank, discussed the ECB’s decision to raise its key interest rates by 25 basis points at the September policy meeting, and fielded questions from the press, according to FXStreet.
The ECB sets monetary policy for the eurozone and aims to maintain price stability, which it defines as keeping inflation at around 2%. In its framework, adjusting interest rates is its main policy tool, with higher rates typically supporting a stronger euro.
The ECB also uses less common tools in extreme situations, such as quantitative easing, where it buys assets by injecting euros into the financial system, which can weaken the currency. FXStreet also notes that quantitative tightening is the reverse approach, involving stopping new bond purchases and ceasing reinvestment of maturing bond principal.
Lagarde’s remarks came alongside a broader explanation of how the ECB Governing Council makes decisions eight times per year, involving heads of eurozone national banks and six permanent members. FXStreet framed the context as part of the ECB’s balance between supporting price stability and responding to changing economic conditions.