President says bank will have to keep policy tight and avoid declaring an end to rate hikes via IrishTimesBiz
Christine Lagarde, president of the European Central Bank:"It is unlikely that in the near future the central bank will be able to state with full confidence that the peak rates have been reached." Photograph: Alex Kraus/BloombergEuro zone inflation has entered a new phase which could linger for some time, requiring the European Central Bank to keep policy tight and avoid declaring an end to rate hikes, ECB president Christine Lagarde said on Tuesday.
The ECB has raised rates at each meeting over the past year, taking its deposit rate to 3.5 per cent, and promised even more tightening as soon as July as it hopes to arrest inflation. “It is unlikely that in the near future the central bank will be able to state with full confidence that the peak rates have been reached,” Ms Lagarde told the ECB Forum on Central Banking in Sintra, Portugal.
The issue is that relatively quick wage growth is now keeping inflation under pressure as workers try to recoup earnings lost to inflation and this process is amplified by lower-than-expected productivity growth.
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