ECB set for rate hike as Lagarde vows: ‘We will do what we have to do’

The head of the European Central Bank (ECB) said “we will do what we need to do” to bring inflation back under control, as officials paved the way for another stormy rate hike next month.

In another dramatic day in financial markets, ECB President Christine Lagarde (pictured) pledged to continue raising interest rates as inflation in the eurozone rose to a record 9.1 percent.

‘We have [to] to bring inflation back to 2 percent in the medium term, and we will do what we have to do, which is to keep raising interest rates in the next meetings,” she told a conference in Frankfurt as the euro crashed to a new 20 low in the year against the dollar, reaching $0.9537 before recovering.

With markets in a feverish mood – and the Bank of England intervenes in gold markets to restore calm – Lagarde’s fellow ECB members have called for another 0.75 percentage point rate hike in the eurozone in October, after the first increase of that size this month.

Slovak central bank governor Peter Kazimir said: ‘We must be strong and even ruthless, regardless of the looming recession.’

Robert Holzmann, the governor of the Austrian central bank, also supported a move of 0.75 percentage points.

Inflation, as elsewhere in the world, has risen in the eurozone since the pandemic and Russia’s invasion of Ukraine.

In July, the ECB raised interest rates from minus 0.5 percent to zero for the first time in more than a decade, before dropping back to 0.75 percent this month.

Another step of this scale would keep rates at 1.5 percent next month.