ECB’s Lagarde: ECB Interest Rates to Stay Restrictive as Long as Necessary
14 October 2023
By Isabel Teles – MARRAKECH, Morocco (Econostream) – European Central Bank President Christine Lagarde on Saturday said that ECB interest rates would remain high for as long as required to meet the inflation target.
In a panel during the 2023 annual meetings of the International Monetary Fund and the World Bank Group, Lagarde said that ‘[i]n any case, our future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to return inflation sustainably to 2%.’
She said that there had been a fall in measures of underlying inflation, but warned that progress would take time.
‘Monetary policy has to strike a balance between reflecting the improving medium-term inflation outlook and avoiding declaring victory too early’, she said, ‘given the long way that we still have to go and the high uncertainty, especially as our projections are premised on developments that are not yet materialised.’
‘[B]ased on current data, that is our baseline’, she said, ‘we consider rates have reached levels that will make a substantial contribution to a timely return of inflation to our target.’
Answering questions from the audience, she said that the ECB was attentive to the transmission of monetary policy.
‘If we were to see that the transmission of monetary policy could be impaired and could lead to disorderly market circumstances, we certainly have the tools to address the issue’, she said.