ECB’s Lagarde: Will Keep Rates at Restrictive Levels as Long as Necessary
24 May 2023
By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Wednesday said the ECB would maintain restrictive interest rates however long it took to get back to price stability in timely fashion.
In a blog post on the website of the ECB, Lagarde said, ‘After years of being too low, inflation is now too high and is set to remain so for too long.’
‘But we will bring inflation back to our target of 2% over the medium term’, she said. ‘That is why we have raised interest rates at a record pace, and why we will bring them to sufficiently restrictive levels – and keep them at those levels for as long as necessary – to return inflation to our target in a timely manner.’
Lagarde, as previously, left unexplained the contradiction between keeping rates restrictive ‘as long as necessary’ subject to the binding constraint of restoring price stability ‘in a timely manner.’