Europe's interest rates are due to rise for the first time since 2011, up from their current level of -0.5pc
Christine Lagarde has pledged to end the eurozone’s long experiment with negative interest rates by raising borrowing costs in July and September.
The first rate rise since 2011 is expected to come next month, taking the European Central Bank’s (ECB) headline deposit rate from minus 0.5pc to minus 0.25pc, even as growth is hammered by the war in Ukraine and China’s “zero Covid” lockdowns.
This is likely to be followed by a move to zero or even 0.25pc in September. The ECB will stop its stimulus programme of bond-purchases, known as quantitative easing, on July 1.
Stock markets sank deeper into the red following Ms Lagarde's hawkish comments. The spread between Italian and German borrowing costs, seen as a crucial indicator of risk in the single currency area, widened.
The President of the ECB said the moves are required to tackle inflation which hit 8.1pc in May and is expected to average 6.8pc this year, more than three times the 2pc target."
