ECB must continue rate hikes even as recession risks rise, Lagarde says

European Central Bank President Christine Lagarde speaks at a press conference after the Council Monetary Meeting in Frankfurt, Germany on March 10, 2022. (Daniel Rowland/Pool via Reuters)

FRANKFURT — The European Central Bank must continue to raise interest rates to keep inflation in check, even if a recession in the eurozone becomes more likely, ECB President Christine Lagarde said in an interview published on Tuesday. rice field.

“Our mission is price stability and we must use all the tools at our disposal to achieve it,” Lagarde told Latvian news agency Delphi, largely repeating last week’s policy message. “We are determined to do what is necessary to bring inflation back to our 2% target,” he said.

The ECB has raised interest rates by a total of 200 basis points in its last three meetings, and the market is pricing in a series of further moves to raise deposit rates from 1.5% to nearly 3% in 2023.

“The destination is clear and we are not there yet,” Lagarde said without specifying where the rate hike could end. “There will be further rate hikes in the future.”

Inflation rose to 10.7% in October and is expected to remain above the ECB’s 2% target through 2024, losing confidence in the ECB’s willingness to bring inflation down, and hurting businesses and households. are at increased risk of starting to adjust their behavior.

“The longer inflation stays at such high levels, the greater the risk that it will spread throughout the economy,” Lagarde said.