Christine Lagarde, during a hearing in front of the European Parliament in Brussels, November 28, 2022 (AFP / Kenzo TRIBOUILLARD)
European Central Bank President Christine Lagarde would be “surprised” to see eurozone inflation peak, suggesting ongoing monetary tightening will continue, she said on Monday.
Price inflation peaked in October at 10.6%, and was also very high at around 5% omitting energy and food prices.
“I would like to see inflation having peaked in October but I think there is too much uncertainty” to assume that is the case, which “would obviously surprise me”, underlined the President of the ECB during a hearing before the European Parliament.
The uncertainty concerns in particular the “repercussion of the high cost of energy on retail prices”, she highlighted.
Faced with high inflation in the wake of the war in Ukraine, the ECB has raised rates by two percentage points since July, the most abruptly in its history.
Inflation in the euro zone (AFP/Archives/Patricio ARANA)
The next hike is scheduled for December at the last meeting of the year, but probably on a smaller scale than the 0.75% increases in September and October, observers say.
Ms. Lagarde sees inflation falling over the longer term as monetary policy and supply-side bottlenecks gradually disappear.
In the immediate term “my best economists (within the ECB)” still see the risk of “rising” inflation, she said. In this context, interest rates “are and will remain the main tool in the fight against inflation”, continued the former French economy minister.
In the United States, the Federal Reserve has started raising rates earlier and more aggressively, now believes that a slower pace of rate hikes may “soon be appropriate”.
© 2022 AFP
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