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ECB: Banking crisis should not mean cutting interest rates

ECB: Banking crisis should not mean cutting interest rates

The president of the European Central Bank (ECB)Christine Lagarde, argued on Sunday that the recent banking crisis should not imply a reduction in interest rates by her institution.

“We don’t have to cut (rates). We’ll see. Because we really have to gauge what will come out of these recent financial events.”Lagarde said in an interview with the news channel CNN.

The hierarch believes it is essential to observe to what extent the banks credit conditions are tightening or not.

“What impact will they have? How will the banks react? How will they assess risk” and how will they continue to lend money to businesses and households”added the director of the ECB.

“If they don’t lend too much and manage their risk, it could diminish our work to reduce inflation (…). But if they tighten credit too much, it will weigh too much on growth.”he explained.

Lagarde was in Washington for the spring meetings of the IMF and the World Bank, which end this Sunday.

Asked about the global economy, she was optimistic: “There is a recovery. This is, I think, a point that was not obvious just six months ago, when we all expected a recession, even if only technical.

(With information from AFP)

Source: Gestion

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