Last week, the European Central Bank raised rates by a quarter of a percentage point to 4%, but suggested that they will be done with rate increases for a bit. ECB Chief Economist Philip Lane tells Yahoo Finance that the 4% interest rate "is going to do quite a bit in bringing inflation all the way back to our 2% target." However, Lane notes that there is still a lot of uncertainty and though "we do think that this 4% will do a lot," that rate needs to held long enough to bring inflation down. Lane also cautions that the bank remains data dependent. Lane also tells Yahoo Finance's Jennifer Schonberger that "the overall environment remains... not fragile." "The banking system is in good shape. Because of the pandemic, household balance sheets look in better shape than normal. Same for corporates. So the kind of toxic mix... you need in order to kind of trigger a deep recession is not present," Lane says. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
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