ECB’s Lagarde: ‘We Will Keep Raising Rates for as Long as Necessary’
23 July 2022
By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Saturday said the ECB would continue hiking interest rates until the medium-term inflation outlook was consistent with price stability.
‘We will keep raising rates for as long as necessary to bring inflation down to our target over the medium term’, she wrote in a blog post on the ECB’s website.
‘We also recognise that Europe is facing great uncertainty, not least over the war and energy prices’, she continued. ‘As the economy evolves and responds to the many challenges from outside and within, the Governing Council will review the situation and decide on the right pace for our next steps depending on the incoming data.’
Inflation was ‘too high’, and while much of it was due to developments beyond monetary authorities’ ability to control, ‘what we can do is ensure that inflation does not become persistent’, she said.
If it did, it could lead to wage-price spirals that would imply runaway inflation, she said.
‘That is why, on Thursday, my colleagues and I on the European Central Bank’s Governing Council decided to raise euro area interest rates by 0.5 percentage points, ending our eight-year spell of negative rates’, she said. ‘We are united in our commitment to make sure that inflation returns to our 2% target over the medium term.’