ECB rates to stay restrictive as long as needed: Lagarde

BLOOMBERG

European Central Bank (ECB) President Christine Lagarde reiterated that borrowing costs will remain elevated for as long as needed to tame consumer prices — even as the economy struggles.
“Our future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary,” Lagarde told lawmakers in the European Parliament.
“We remain determined to ensure that inflation returns to our 2% medium-term target in a timely manner,” she said in Brussels, sticking closely to this month’s ECB policy statement that accompanied a 10th straight hike in rates to 4%.
That’s a level most economists and investors reckon will be the peak in a more than yearlong campaign to stamp out inflation. Some Governing Council have endorsed that assessment, with Spain’s Pablo Hernandez de Cos reiterating on Monday that the current level should bring price growth back to the 2% goal if maintained for long enough.
Bank of France Governor Francois Villeroy de Galhau said the ECB shouldn’t test the economy “until it breaks” — a hint that prefers not raising rates any further.
Lagarde, too, acknowledged the pain the ECB’s actions are causing, particularly for the 30% of households that have variable-rate mortgages.