The European Central Bank “absolutely” wants to avoid high inflation leading to excessive upward pressure on wages. Recent interest rate hikes should signal his determination to hit his price target, said President Christine Lagarde.
Inflation in the euro area, which hit a new high of 9.1% in August, is largely driven by the surge in energy costs resulting from the Russian war in Ukraine, but the ECB must act to prevent further price increases.
“We have more supply shocks than demand shocks, but we have both, so we are forced to act with this complicated mix of supply and demand in mind,” Lagarde told an audience of students on Friday.
“So what we need to do as a central bank is to focus on our price stability target, which we have set at 2% over the medium term,” he said. “We must therefore use all the monetary policy tools at our disposal to achieve this goal.”