European Central Bank President Christine Lagarde believes that the central bank’s fiscal policy will succeed in cooling inflation so long as the central bank persists on its path. “We want to bring inflation to 2% and we will succeed,” Lagarde remarked, adding that it is absolutely imperative to allow inflation to rebound.
At its last policy meeting in September, the ECB raised its interest rates for the 10th straight month. This saw the deposit rate rise to a record 4%. According the Lagarde, such interest rate levels need to be maintained in order to lower inflation to the ECB’s 2% target.
While the ECB’s tight fiscal policy has slowed economic growth in the region, the ECB president maintained that bringing on a recession was not her intention. Still, she was quick to point out that this is a worldwide trend, adding “That’s why the International Monetary Fund has revised its forecasts lower in the whole world, except for the US.” The IMF is set to release its latest economic projections on Tuesday.