Eurozone slowdown will get worse, warns Lagarde — RT Business News

Inflation in the euro zone has not peaked and is expected to rise more than currently expected, European Central Bank (ECB) President Christine Lagarde warned on Monday.

According to Lagarde, it is difficult to say whether inflation, which hit a record 10.6% in annual terms last month, will soon decline in the bloc of 19 countries that use the euro.

“I would like to see inflation peak in October, but I’m afraid I won’t go that far,” he added. she told EU lawmakers in Brussels. “There is too much uncertainty, particularly in one component, namely the pass-through of high energy costs at the wholesale level to the retail level, to assume that inflation has indeed peaked. I’d be surprised.

Lagarde added that ECB economists are still seeing clearly « Upside down » risks, which means that the inflation figures could be higher than expected.

Meanwhile, investors are awaiting any sign of the ECB’s next policy moves, following the most aggressive interest rate hikes in borrowing costs in its history, and as the eurozone braces for a recession.

« How far we need to go and how quickly we need to get there will depend on our updated outlook, the persistence of shocks, the reaction of wages and inflation expectations, and our assessment of the transmission of our policy stance. , » said Lagarde. That may involve raising borrowing costs to levels that restrict economic growth, she noted.

After the third major rate hike in October, marking its fastest rate of increase on record, the ECB expects “to raise rates further to the levels needed to ensure that inflation returns to our medium-term target of 2% in a timely manner,” according to Lagarde.

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