ECB Lagarde has played down fears of a recession in the euro zone.
"If the inflation outlook does not improve, we will have sufficient information to move faster. This commitment is, however, data dependent," Lagarde added Tuesday.Speaking to CNBC, Erik Nielsen, global chief economist at UniCredit, said he does not expect this year's forum to address disparities between public debt levels, but to focus more on the future of monetary policy.
"Can you really hike interest rates into a recession even if inflation is high? That would be unusual," he said.and then again after the summer. This would likely bring the ECB's deposit rate back out of negative territory and mark a massive moment for the central bank, which has kept rates below zero since 2014.
However, there are questions on whether Lagarde will follow through with multiple rate hikes with the region's growth outlook darkening. The ECB in June forecast a GDP rate of 2.8% for the euro zone this year, but economists are starting to talk about the prospect of a recession toward year-end off the back of Russia's invasion of Ukraine and the impact that's having on the global economy.
"They can't implement what they are saying, they will do the next one and maybe one more hike but then it is going to be really difficult for them, both in the U.S. a little bit later, and in Europe," he added.
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