ECB must keep raising rates even if recession risks rise, Lagarde says
(VOVWORLD) -The European Central Bank must keep raising interest rates to fight off inflation, even if the probability of a euro zone recession has increased, ECB President Christine Lagarde said in an interview published on Tuesday.
 ECB headquarters in Frankfurt am Main, Germany. (Photo: AFP/VNA) |
"Our mandate is price stability and we have to deliver on that using all the tools we have available," Lagarde told Latvian news outlet Delfi, largely repeating last week's policy message. "We are determined to do what is necessary to bring inflation back to our 2% target."
The ECB has raised interest rates by a combined 200 basis points over the past three meetings, and markets are pricing in a string of further moves that would take the 1.5% deposit rate close to 3% in 2023.
Inflation rose to 10.7% in October and is expected to stay above the ECB's 2% target through 2024, raising the risk that businesses and households start adjusting their behavior as they lose trust in the ECB's willingness to get it back down.