“For the ECB, the immediate and primary task is to bring inflation back to our medium-term 2 percent target in a timely manner. And we will fulfill this task,” said the Frenchwoman at the celebration of the 25th anniversary of the European Central Bank (ECB ) in Frankfurt am Main. In a blog post, Christine Lagarde previously pointed out that the ECB had hiked interest rates in record time. It will raise them to a sufficiently restrictive level and leave them there for as long as necessary. This is the only way for the ECB to bring inflation back to its target in a timely manner.
After years of low inflation, it is now too high and is likely to remain too high for too long. This reduces the value of money, reduces purchasing power and affects people and companies throughout the euro area. “Especially the most vulnerable in our society,” added Lagarde.
Because of the persistently high inflation that has been weighing on companies and consumers for months, the monetary watchdogs have raised interest rates seven times in an unprecedented series since July 2022 after years of zero and negative interest rates. The key interest rate in the euro area is now 3.75 percent.
Europe should move closer together
At the same time, Lagarde called for further unification steps in Europe. “One monetary union is not enough – it is important to continue the process of unification,” she said at the ceremony in Frankfurt. “The Union should be multi-faceted, encompassing fiscal, financial and banking areas for greater integration, especially if the euro is to consolidate its status as an international currency.”
Commenting on the ECB’s work over the past 25 years, Lagarde said: “It has not always been easy. But in good economic times and bad, under the leadership of my predecessors Wim Duisenberg, Jean-Claude Trichet and Mario Draghi, the European Central Bank has always been on the ball intent on fulfilling its mission and thereby strengthening the foundations for Europe’s future.”
Scholz expects expansion of the euro area
Chancellor Olaf Scholz said at the ceremony that he was confident that more countries would join the euro area. “The euro has proven to be one of the most successful European integration projects.” The ECB is an “anchor for stability in the euro area” and he “fully supports” the efforts of the central bank in the fight against high inflation, said the Chancellor.
In addition to the Federal Chancellor, the President of the European Commission Ursula von der Leyen, the President of the European Parliament Roberta Metsola and the President of the European Council Charles Michel attended the ceremony at the ECB headquarters. Former ECB Presidents Jean-Claude Trichet and Mario Draghi also attended. The first president of the joint central bank, Wim Duisenberg, died in 2005.
The ECB started its work on June 1, 1998. On January 1, 1999, the euro era began for eleven of the then 15 member states of the European Union: the European common currency was initially used electronically as a clearing currency alongside means of payment such as Deutscher Mark, Lira or Schilling. On January 1, 2002, these national currencies disappeared and the euro was put into circulation in notes and coins. Since Croatia’s accession on January 1, 2023, the common currency has now been the official means of payment for more than 346 million people in 20 EU countries.
kle/mak (rtr, dpa)