The president of the European Central Bank, Christine Lagarde, said that a rate hike to a restrictive level may be needed to bring inflation back to the 2% target.
In a speech on Friday in the Estonian capital Tallinn, Lagarde added that after increasing borrowing costs by two percentage points in three months, the European Central Bank may have to bring them to a level where they will drag the economy.
Estonia is experiencing the strongest consumer price growth in the euro area, exceeding 25%.
ECB officials continue to believe in the need to fight inflation, despite the fact that an economic downturn is looming and some central banks are slowing interest rate increases.
And Lagarde warned on Thursday of the possibility of a “moderate recession.”
Source: db a