European Central Bank (ECB) President Christine Lagarde said on Thursday that the looming recession will not be enough to curb rising prices as the institute is rapidly raising rates.
The scenario of a “modest recession” in the euro zone is possible at the end of 2023 but “we do not believe that this recession will be enough to tame inflation,” said Christine Lagarde during a forum organized in Riga by the Bank of Lithuania. .
Having raised its rates a total of 2.0 points since July, from a historically low level, the monetary institute is determined to continue this cycle of increases to bring inflation to its target of 2%, compared to more than 10%. . currently.
A rapid rise in risk rates
The central banker warned at the same time of the risks linked to the rapid rise in rates, after the US Central Reserve (Fed) raised its rates to its highest level in almost 15 years on Wednesday and plans to continue increasing them.
“When calibrating” the decisions, “we must be very careful not to amplify the risk of a prolonged recession or of provoking a dislocation of the market”, warned Fabio Panetta, member of the executive committee of the ECB, during a symposium in Frankfurt on the money market. .
“A larger-than-expected rate hike could increase volatility and have a stronger impact in the current high-debt environment after a decade of very low rates and abundant liquidity,” the dove-listed central banker added. “Followers of a loose monetary policy, now in the minority within the ECB.
Source: BFM TV
