The head of the European Central Bank says interest rates will stay high enough to restrict business activity for “as long as necessary” to beat back inflation because upward pressure on prices “remains strong.”
President of European Central Bank Christine Lagarde speaks at the press conference in Frankfurt, Germany, Thursday, Sept.14, 2023, after a meeting of the ECB's governing council. The head of the European Central Bank said Monday that interest rates will stay high enough to restrict business activity for “as long as necessary” to beat back inflation because upward pressure on prices “remains strong” in the 20 countries that use the euro currency.
“We remain determined to ensure that inflation returns to our 2% medium-term target in a timely manner,” Lagarde told the European Parliament’s committee on economic and monetary affairs. “Inflation continues to decline but is still expected to remain too high for too long.” Analysts think the ECB may be done raising rates given signs of increasing weakness in the European economy. Other central banks, including the Bank of England and the U.S. Federal Reserve, held off on rate increases last week as they draw closer to the end of their rapid hiking campaigns.
Lagarde has said interest rates are now high enough to make a “substantial contribution” to reducing inflation if “maintained for a sufficiently long duration.” The bank sees inflation declining to an average of 2.1% in 2025 after hitting a record-high 10.6% in October.
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