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European Central Bank President Christine Lagarde said there’s “still a way to go” on raising interest rates to counter record inflation.
Price growth in the euro zone, which hit 10,7 percent last month, is “way too high,” Lagarde said Thursday evening in an interview with Latvian television. She said the ECB will use all of its instruments to return it to the 2 percent target.
“Inflation everywhere is way too high,” Lagarde said. “So there is no question in my mind that we just have to fight that inflation.”
ECB officials are doubling down on their inflation-fighting rhetoric, even as a downturn looms over the 19-nation euro area’s economy.
Lagarde said earlier Thursday at a conference in Riga that while a “mild recession” is possible, that wouldn’t be sufficient to tame inflation.
Other Governing Council members echoed her remarks in a busy day of public appearances. Borrowing costs “are still way below where they should be,” Latvian central bank Governor told Bloomberg, while his Italian counterpart, Ignazio Visco, said the 3 percent peak of the rate-hiking cycle priced in currently by markets is “a possibility.”
There was some pushback — from ECB Executive Board member Fabio Panetta, for one.
“We will need to carefully consider the resilience of our economy, the implications of global monetary spillovers, and emerging threats to financial stability,” he warned.
Lagarde said the ECB’s price-stability mandate and meeting its inflation target remain the priorities.– Bloomberg
Online Reporter