It’s not a threat, but Lagarde guarantees that interest rates will continue to rise, even with the risk of recession

It’s not a threat, but Lagarde guarantees that interest rates will continue to rise, even with the risk of recession

Christine Lagarde stresses that controlling inflation is a priority for the European Central Bank. He realizes that the risks of recession have increased

European Central Bank President Christine Lagarde defended this Tuesday that interest rates will continue to rise until inflation returns to the 2% level, even if that carries greater risks of a recession, she said in an interview. Latvian newspaper Delphi.

Our target is an interest rate that guarantees an inflation target of 2% over the medium term. “Our destination is clear and we are not there yet,” said the ECB President, despite the lack of commitment to the value of future increases. Also in this regard, Christine Lagarde indicated that future increases by the ECB will be decided “meeting after meeting.”

The ECB president also acknowledges that the possibility of a recession has increased, but stresses that the central bank’s goal is linked to price stability. To this end, Lagarde argues that all tools available to the organization must be used and that the most efficient and appropriate ones have been used.

The current ECB forecast, released in September, indicates a gradual decline in inflation through 2024, from 8.1% in 2022 to 5.5% in 2023, and then a decline to 2.3% in 2024. Growth is expected to slow to 0.9% next year, and to reach 1.9% in 2024.

The most pessimistic scenario expects “slightly higher” inflation at the end of this year, and a decrease to 2.7% in 2024. Along with this scenario, the European Central Bank also expects contraction economy in 2023, followed by a return to growth the following year. The next ECB economic review is scheduled for December.

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By Andrea Hargraves

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