The European Central Bank’s policy will help tame inflation, according to President Christine Lagarde.
“We want to bring inflation to 2% and we will succeed,” Lagarde told La Tribune Dimanche in an interview, adding that an inflationary spiral “must absolutely be avoided.”
The ECB last month increased borrowing costs for a 10th straight time to bring the deposit rate to a record 4%. Most policymakers have indicated that maintaining this level for some time should be sufficient to bring inflation back to target, though more hawkish officials indicate more hiking may be required.
“The ECB’s key interest rates have reached levels that, if maintained for a sufficiently long time, will contribute in a decisive way to bringing inflation toward our target as soon as possible,” she said, repeating her institution’s most recent policy stance.
The central bank’s rate aggression has weighed on the economy, which has hardly grown this year, though Lagarde highlighted that it wasn’t her aim to create a recession.
She said that she’s “not pessimistic” about short-term growth prospects, though she acknowledged that Germany is a factor weighing on the European outlook.
Inflation is persisting, but slowing, and at the same time growth is getting weaker, she said.
“That’s why the International Monetary Fund has revised its forecasts lower in the whole world, except for the US,” Lagarde said.
The IMF is scheduled to publish fresh economic projections on Tuesday ahead of its annual meeting.
