European Central Bank President Christine Lagarde would be “surprised” to see euro zone 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’d like to see inflation peaking in October but I think there’s too much uncertainty to assume that’s the case, which would obviously surprise me, ECB President said at hearing before the European Parliament.
The uncertainty concerns in particular the repercussion of the high cost of energy on retail prices, she pointed out.
Faced with high inflation in the wake of the war in Ukraine, the ECB has raised its rates by two percentage points since July, the most abruptly in its history.
The next increase is scheduled for December at the last meeting of the year, but probably on a smaller scale than the increases of 0.75% in September and October, according to observers.
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Ms. Lagarde sees inflation falling longer term under the action of monetary policy and the gradual disappearance of bottlenecks on the supply side.
In the immediate future 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 US, the Federal Reserve has started to raise rates earlier and more aggressively, now believing that a slower pace of rate hikes may soon be appropriate.