ECB’s Lagarde says data will tell if December rate hike needed
Analysts expect inflation to climb further in the coming months
European Central Bank President Christine Lagarde expressed on Thursday (Nov 5) that data will determine whether a December rate hike is necessary, as the bank considers various indicators ahead of the decision. Currently holding rates steady at 2.5 percent since October, the ECB's outgoing president emphasized that inflation is currently running higher than the bank's target of around 2 percent.
Lagarde attributed the high inflation to primarily rising energy costs, which are affecting both growth and prices in the euro zone. While acknowledging the challenges posed by the energy shock stemming from the Iran war and the growing impact of artificial intelligence on the economy, Lagarde stressed the importance of distinguishing between supply-driven and demand-driven inflation.
She cautioned against applying interest rate adjustments uniformly, as it could lead to unintended consequences. Lagarde, who plans to step down by February 7, 2027, highlighted that the ECB's economic projections will provide further guidance for the decision-making process.
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