FRANKFURT (Reuters) – The European Central Bank (ECB) must keep raising rates to contain inflation, even as the likelihood of a euro zone recession has increased, Bank President Christine Lagarde said in an interview published on Thursday. Tuesday.
“Our mandate is price stability and we have to fulfill that using all the tools we have available,” Lagarde told Latvian Delfi, echoing last week’s monetary policy message. “We are determined to do whatever is necessary to bring inflation back to our 2% target.”
The ECB raised interest rates by a total of 200 basis points in the last three meetings, and markets are pricing in a series of other moves that would take the deposit rate from 1.5% to close to 3% in 2023.
“The destination is clear and we’re not there yet,” Lagarde said without specifying where the interest rate hikes might end. “We will have more increases in the future.”
Eurozone inflation rose to 10.7% in October and is expected to stay above the ECB’s 2% target by 2024, raising the risk that companies and households will begin to adjust their behavior as they lose confidence in the willingness of the bank to recover it.
“The longer inflation stays at such high levels, the greater the risk that it will spread throughout the economy,” Lagarde said.
(Reporting by Balazs Koranyi)
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