Home Business ECB’s Lagarde says more rate hikes to come even as economy weakens- Shangbao Indonesia

ECB’s Lagarde says more rate hikes to come even as economy weakens- Shangbao Indonesia

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ECB’s Lagarde says more rate hikes to come even as economy weakens- Shangbao Indonesia

November 29, 2022 at 23:33 PM

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Lagarde, President of the European Central Bank.

ECB President Christine Lagarde said the ECB will raise interest rates further even if the economy weakens. The ECB will continue to raise rates as long as needed. If price pressures continue to rise, the ECB may raise interest rates to restrictive levels.
“How far we need to go, and how quickly we need to move, will depend on the latest outlook, the persistence of the shock, the response of wage and inflation expectations, and our assessment of the transmission of the policy stance,” Lagarde said.
Lagarde pointed out that high inflation in the euro zone is weakening consumer spending and factory production. She promised that the European Central Bank is committed to reducing the inflation rate to its medium-term target and is determined to take the necessary measures to this end. “We expect further increases in interest rates to ensure that inflation returns to the 2% medium-term target in time.”
Lagarde said she would not be too aggressive in saying that inflation in the euro zone had peaked. “There are too many uncertainties, especially the process of passing on high energy costs at the wholesale level to the retail level, to conceive that inflation has actually peaked. I would be surprised if euro zone inflation has peaked.”
Risks to the euro zone’s inflation outlook are to the upside, underscoring the pressure on the ECB to raise rates. The latest data show that the reconciled CPI in the euro zone rose by 10.7% year-on-year in October, hitting a record high. Most market participants expect inflation data to fall slightly in November, though still above 10%.
Lagarde also pointed out that high uncertainty, tightening financial conditions and weak global demand are weighing on economic growth, and the euro zone economy is expected to continue to weaken for the rest of this year and early next year.

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