European Central Bank (ECB) President Christine Lagarde said this Saturday that interest rates will rise as much as necessary to bring inflation back to 2%.
“We are sending a clear message to companies, employees and investors: inflation will return to our 2% target in the medium term,” Lagarde said in an article for German group Funke Mediengruppe.
The measures taken so far, according to Lagarde, “already have an impact on interest rates in the eurozone.”
The comments, published by Bloomberg, come a day after the ECB raised rates more than expected after eight years of negative territory to fight inflation, which hit 8.6% in the eurozone in June and is expected to rise further.
Investors estimate further ECB rate hikes by around 113 basis points by the end of the year, according to the market.
“We will raise interest rates until inflation returns to our target,” Lagarde added. The Board of Governors “will decide on the appropriate pace of our next steps in the light of new data available.”
According to Lagarde, prices are rising mainly due to factors beyond the control of central banks. But the ECB’s measures were intended to ensure that inflation “does not remain persistently high,” which could happen if a price-wage spiral materialized, he said.
The new tool to contain market turmoil, unveiled by the ECB on Thursday, “will support the coherence of our monetary policy, helping to keep prices stable over the medium term,” he concluded.
Author: Lusa
Source: CM Jornal
