Lagarde says ECB will act again if needed as rate impact gauged

EUROPEAN Central Bank President Christine Lagarde said officials will raise interest rates again if they have to, and are gauging the impact of prior moves that are still feeding through. 

Speaking to Bloomberg Television’s Tom Keene during a panel discussion in the Moroccan city of Marrakech, she said that policymakers are judging “multiple moving parts” that will affect the outlook of economies in the eurozone and around the world. 

“We have seen tightening of financial conditions like we haven’t seen before,” Lagarde said, observing that the effects of “strong but lagged” monetary policy move have yet to fully impact the economy.

“As I’ve said before, our aim, our mission, is to return inflation to 2 per cent medium term –  and we will, and it is happening as we speak, and we will hang onto that, be steady long enough, and ready to do more if necessary,” she said. 

The appearance on Friday by Lagarde alongside three other senior women in finance at the International Monetary Fund’s annual meetings is one of her last before a blackout period begins in advance of the ECB’s Oct 26 decision.

Policymakers have signalled no intention of any move in interest rates at that gathering, after they raised for a 10th consecutive time in a close-run outcome at their gathering in September.

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Lagarde and her colleagues have refused to rule out another hike in borrowing costs if needed. They have pointed to the December decision – their last of 2023 – as a pivotal moment to assess their monetary policy stance, given that they will have new projections then on which to form a fuller judgment. BLOOMBERG