ECB must continue to raise rates despite risk of recession-Lagarde | Photo credits: Peter Dejong/AP/SIPA
FRANKFURT, Nov 1 (Reuters) – The European Central Bank (ECB) must keep raising rates to fight inflation, even as the risk of a recession in the euro zone has increased, said Christine Lagarde, the president of the institution, in an interview published on Tuesday.
“Our mandate is price stability and we have to fulfill it using all the tools at our disposal,” Christine Lagarde told Latvian news site Delfi. “We are determined to do what is necessary to bring inflation back towards our 2% target.”
The ECB has raised rates by 200 basis points in the last three meetings and markets believe that the ongoing monetary tightening cycle could push the deposit rate, currently at 1.5%, to almost 3% in 2023. .
“The destination is clear and we are not there yet,” said Christine Lagarde without specifying where the rate hikes could stop. “We will have more rate hikes in the future.”
Inflation hit a record high of 10.7% year on year in October and is expected to remain above the ECB’s 2% target until 2024.
“The longer inflation remains at such high levels, the greater the risk that it will spread to the whole economy”, added the President of the ECB. (Report Balazs Koranyi; French version Laetitia Volga)