European Central Bank chief vows to 'stay the course' on interest rates to tame inflation

European Central Bank chief vows to 'stay the course' on interest rates to tame inflation

'Inflation, by all accounts, is way too high,' Christine Lagarde says at World Economic Forum in Davos

By Aysu Bicer

DAVOS, Switzerland (AA) – European Central Bank (ECB) chief Christine Lagarde on Thursday said she remains determined to “stay the course” with high interest rates to rein in spiking inflation.

“Inflation, by all accounts, is way too high,” she told the World Economic Forum in Davos, Switzerland.

“There is determination at the ECB to bring inflation back to 2% in a timely manner, and we should stay the course until we have been in restrictive territory for long enough to bring inflation down.”

On the upside, she added, Europe’s job market “has never been as vibrant as it is now.”

“The unemployment number is at rock bottom compared with what we’ve had in the last 20 years. And the participation rate which matters as well, is also (at a) very, very high level, and that is pretty much homogeneous throughout the euro area,” Lagarde said.

She also pointed out that news about the eurozone economy “has been much more positive in the past few weeks.”

“It will not be a brilliant year (in 2023), but a lot better than feared,” she added.

According to the ECB, interest rates need to be increased to bring down inflation to a medium-term target of 2%.

The bank expects inflation in the euro area to be around 6.3% in 2023, 3.4% in 2024, and 2.3% in 2025.

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