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European Central Bank boss Christine Lagarde warns of more rate hikes to fight inflation
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The boss of the European Central Bank has warned it must continue to raise interest rates to fight inflation, despite the threat of a recession.
A day after the figures showed inflation in the eurozone at a record high of 10.7 percent, Christine Lagarde said: “We are determined to do what it takes to bring inflation back to our target of 2 percent.”
The ECB has raised interest rates by no less than two percentage points in the past three meetings, from minus 0.5 percent to plus 1.5 percent.
Rate hikes: ECB boss Christine Lagarde said she was determined to do whatever it takes to bring inflation back to 2%
The rates are expected to be 3 percent next year.
“The destination is clear, and we’re not there yet,” Lagarde said without specifying where the rate hikes could end.
‘We will have rate increases in the future. The longer inflation remains at such a high level, the greater the risk of it spreading through the economy.’
But the eurozone could be hit by a recession as rising prices of everything from energy to food hit households and businesses.
Germany, which has been the engine of the European economy for many years, has suffered particularly badly from its dependence on Russian gas.
The eurozone economy slowed sharply in the third quarter of the year, growing just 0.2 percent, after growing 0.8 percent in the previous three months.