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. 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.
Christine Lagarde said “strong spending on holidays and travel” and increasing wages were slowing the decline in price levels even as the. Annual inflation in the eurozone eased only slightly from 5.2% in July to 5.3% in August. “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.”
The ECB last week raised its benchmark deposit rate to an all-time high of 4% after a record pace of increases from minus 0.5% in July 2022. Analysts think the ECB may be done raising rates given signs of increasing weakness in the European economy. Other central banks, including the
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