IMF: ECB needs to maintain rates at or near 4% through 2024 to tame inflation

Dhwani Mehta FXStreet

Alfred Kammer, the head of the International Monetary Fund’s (IMF) European Department suggested on Wednesday that the European Central Bank (ECB) should maintain interest rates at or near 4.0% through the next year to bring inflation down.

Key quotes

“The ECB's deposit rate should stay close to its record high 4% level through all of next year.”

"Monetary policy is appropriately tight and needs to remain so in 2024.”

"For all intents and purposes, (the deposit rate) should be held at that level or close to that level throughout 2024."

"It is less costly to be too tight rather than to be too loose.”

“What we also want to avoid is premature celebrations."

"Risks remain skewed toward more persistent inflation.”

"Under adverse assumptions, this could delay reaching inflation targets to 2026."

Market reaction

At the time of writing, EUR/USD is trading 0.12% lower on the day at 1.0685.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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