European Central Bank President Christine Lagarde said that core inflation in the eurozone will remain high in the near term and therefore a 50bp rate hike later this month is becoming increasingly likely.
European Central Bank President Christine Lagarde said that core inflation in the euro area will remain high in the near term and therefore a 50 basis point rate hike later this month is becoming increasingly likely.
The ECB has already raised rates by three percentage points since July and has pledged to approve another half-percentage point increase on March 16.
Lagarde told Spanish media group Fucento that the increase was now "very, very likely" and warned that core inflation, which excludes volatile food and fuel prices, could remain alarmingly high even as headline inflation declines in the coming months.
"In the short term, core inflation will be high," the group was quoted as saying on Sunday.
A number of policymakers have recently cautioned that the ECB's rate hike should continue until core inflation begins to decline towards its target rate of 2%.
Core inflation rose to a record 5.6% last month and some policymakers fear that the increase is due to a rise in wages in the services sector, making price growth more sustainable and more difficult to rein in.
"We have to continue to take whatever measures are necessary to bring inflation back to 2%, and we will," Lagarde said.
Tags:
EUROPE UPDATE