Lagarde promises that inflation will return to the 2 percent target “in the medium term”

July 23 () –

The president of the European Central Bank, Christine Lagarde, declared this Saturday that interest rates will rise as much as necessary for inflation to return to 2%.

“We are sending a clear message to companies, employees and investors: inflation will return to our target value of 2% in the medium term,” an opinion piece for the German conglomerate Funke Mediengruppe reported.

The measures adopted so far, according to Lagarde, “are already having an impact on interest rates throughout the euro area.”

The comments, picked up by Bloomberg, come a day after the ECB raised rates more than expected after eight years in the negative to fight inflation that reached 8.6% in June and will continue to accelerate.

Investors estimate around 113 basis points in additional hikes from the ECB by the end of the year, according to market bets.

“We will raise interest rates for as long as it takes for inflation to return to our target,” Lagarde added. The Governing Council “will decide the appropriate pace for our next steps based on new data available.”

Prices rise largely due to factors beyond the control of central bankers, according to Lagarde. But the ECB’s measures were intended to ensure that inflation “does not remain permanently high”, which could happen if a spiral of wages and prices materialized, according to the president.

The new tool to contain the turmoil in the markets that the ECB presented on Thursday “will maintain the coherence of our monetary policy, helping to keep prices stable in the medium term,” he concluded.