FRANKFURT (Reuters), March 17, 2017 – The European Central BankChristine Lagarde (ECB President) said Thursday that it had given itself more space than expected between the end of its money printing program this summer, and the first increase in interest rates for over a decade.

After the election, investors were increasing their stakes in higher ECB rate. Federal Reserve raised the cost of borrowing late on WednesdayThe government tightened its stance, the first since the beginning of the coronavirus epidemic and in spite of uncertainty stemming out of Russia’s invasion Ukraine.

After spending the majority of the decade below the ECB’s 2% target, central banks all over the globe have become caught up in an inflation wave that has swept across the planet.

Lagarde, however, repeated last week’s message and said that any rise in the ECB’s policy rate will occur gradually after it has completed its bond-buying programme. That should be in the third quarter of this year, barring further financial turmoil.

At a Frankfurt conference, she stated that “this preserves our conventional sequencing logic, and also allows us to have extra space if necessary after we cease purchasing bonds and before taking the next step toward normalization.”

By the end of 2018, money markets priced increases in excess 50 basis points to ECB’s Deposit Rate. It would return to zero after 8 years in negative territory.

Lagarde also said the ECB may develop new tools that ensure monetary policies reach all parts of the Euro zone, even though it is cutting back on its bond purchases.

This has helped limit the difference between the borrowing cost of Germany’s top-rated country and that of countries with high levels indebtedness like Italy or Greece.

Lagarde added that it was possible to design and implement new instruments in order to ensure monetary policy transmission.