Despite the possibility of a recession in the European Currency area, according to Christine Lagarde, chairwoman of the European Central Bank, the bank should keep raising interest rates to battle inflation.
“Our goal is to stabilise prices, and we must use all of the tools at our disposal to do so.
Lagarde stated in an interview with the Latvian news website Delphi that was published today, Tuesday, “and we are determined to do all required to re-inflation to the target rate at 2%.
Over the course of its last three sessions, the central bank boosted interest rates by 200 basis points.
According to market projections, the bank may make a number of other actions that might increase the interest rate on deposits, which is now 1.5%, to almost 3% in 2023.
Without specifying the ceiling at which interest rates must stop, Lagarde stated, “The goal is obvious, and we have not yet attained it.”
Future interest rates will be higher, she predicted.
The rate of inflation rose to 10. 7% in October, and it is anticipated that the European Central target will remain in place until 2024, increasing the likelihood that businesses and families will start to cut back on their spending while losing faith in the central bank’s intention to keep inflation under control.
“More effects across all areas of the economy,” Lagarde continued, “the longer the period of inflation persists at these high levels.”
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