The European Central Bank (ECB) would not be rushed into withdrawing monetary stimulus as officials act to contain inflation running at almost four times their 2 percent target, ECB President Christine Lagarde said.
“I don’t think that we’re in a situation of surging demand at the moment,” she told Francine Lacqua on Bloomberg Television from the World Economic Forum in Davos, Switzerland, yesterday.
“It’s definitely an inflation that is fueled by the supply side of the economy. In that situation, we have to move in the right direction, obviously, but we don’t have to rush and we don’t have to panic,” she said.
Photo: AP
Lagarde spoke a day after laying out her vision for the central bank’s next steps in a blog post.
The ECB is likely to exit negative monetary policy by the end of the third quarter, with a first interest-rate increase set for July, she said.
That prospective timetable signaling two quarter-point interest-rate hikes in the third quarter has irked some colleagues, because it would effectively exclude moving with a half-point increment, according to people familiar with the matter.
Some officials, including Bank of France Governor Francois Villeroy de Galhau, have also suggested that the ECB might end the year with positive interest rates. Traders are wagering on four 25-basis-point hikes by the ECB by the end of this year.
“When you’re out of negative, you can be at zero, you can be slightly above zero,” Lagarde said. “This is something we will determine on the basis of our projections, on the basis of our forward guidance.”
Lagarde refused to be drawn on whether the central bank might consider a 50 basis-point move.
Policymakers are walking a fine line as Russia’s invasion of Ukraine sent prices surging while denting confidence among businesses and households. New COVID-19 restrictions in China are putting additional strains on supply chains.
However, the ECB president downplayed the risk of an economic contraction, saying “for the moment, we are not seeing a recession in the euro area.”
She cited unemployment “at rock-bottom rates,” large household savings and the prospect for a strong summer for the tourism industry as forces that would offset negative shocks from the war and record inflation.
PATENTS: MediaTek Inc said it would not comment on ongoing legal cases, but does not expect the legal action by Huawei to affect its business operations Smartphone integrated chips designer MediaTek Inc (聯發科) on Friday said that a lawsuit filed by Chinese smartphone brand Huawei Technologies Co (華為) over alleged patent infringements would have little impact on its operations. In an announcement posted on the Taiwan Stock Exchange, MediaTek said that it would not comment on an ongoing legal case. However, the company said that Huawei’s legal action would have little impact on its operations. MediaTek’s statement came after China-based PRIP Research said on Thursday that Huawei filed a lawsuit with a Chinese district court claiming that MediaTek infringed on its patents. The infringement mentioned in the lawsuit likely involved
Taipei is today suspending work, classes and its US$2.4 trillion stock market as Typhoon Gaemi approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed income trading, statements from its stock and currency exchanges said. Authorities had yesterday issued a warning that the storm could affect people on land and canceled some ship crossings and domestic flights. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) expects its local chipmaking fabs to maintain normal production, the company said in an e-mailed statement. The main chipmaker for Apple Inc and Nvidia Corp said it has activated routine typhoon alert
GROWTH: TSMC increased its projected revenue growth for this year to more than 25 percent, citing stronger-than-expected demand for AI devices and smartphones The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday raised its forecast for Taiwan’s GDP growth this year from 3.29 percent to 3.85 percent, as exports and private investment recovered faster than it predicted three months ago. The Taipei-based think tank also expects that Taiwan would see a 8.19 percent increase in exports this year, better than the 7.55 percent it projected in April, as US technology giants spent more money on artificial intelligence (AI) infrastructure and development. “There will be more AI servers going forward, but it remains to be seen if the momentum would extend to personal computers, smartphones and
Catastrophic computer outages caused by a software update from one company have once again exposed the dangers of global technological dependence on a handful of players, experts said on Friday. A flawed update sent out by the little-known security firm CrowdStrike Holdings Inc brought airlines, TV stations and myriad other aspects of daily life to a standstill. The outages affected companies or individuals that use CrowdStrike on the Microsoft Inc’s Windows platform. When they applied the update, the incompatible software crashed computers into a frozen state known as the “blue screen of death.” “Today CrowdStrike has become a household name, but not in