European Central Bank President Christine Lagarde affirmed plans to lift interest rates by another half-point next month, saying officials remain determined to return inflation to the 2% goal.
(Bloomberg) — European Central Bank President Christine Lagarde affirmed plans to lift interest rates by another half-point next month, saying officials remain determined to return inflation to the 2% goal.
“What comes after that will be data dependent,” Lagarde said in remarks released Tuesday. “We will look at all numbers — inflation, obviously, labor cost, projections and we will determine what our monetary-policy path will be after that.”
Bringing price gains back to the target is “the best thing we can do for the economy,” Lagarde told Finnish TV during a non-monetary-policy meeting this week in the Nordic country.
Most ECB officials are maintaining a tough stance as a retreat in headline inflation masks stubborn underlying price pressures. While there have been some calls to slow the pace of rate hikes, comments from the Governing Council’s more hawkish members have pushed up market bets on monetary tightening beyond March.
Speaking to Bloomberg last week, Executive Board member Isabel Schnabel said the ECB remains “far away from claiming victory.” Bundesbank President Joachim Nagel has warned that more “significant” rate increases will be required.
Lagarde acknowledged that headline inflation is receding and said the ECB is “looking at wages and negotiated wages very very closely.”
“It is quite normal that we see at the moment inflation catchup as a key theme of negotiations between unions and employers associations,” she said. “At this point in time, for the whole of the euro area, we don’t see this spiraling of inflation-wages, inflation-wages,” she said.
–With assistance from Leo Laikola.
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