European Central Bank President Christine Lagarde said it would ‘surprise’ her if inflation had already peaked, while warning that interest rates could continue to rise, during an address at the European Parliament in Brussels on Monday.
“I would like to see inflation having peaked in October, but I’m afraid I would not go as far as that,” she told a hearing of the Committee on Economic and Monetary Affairs.
“There is too much uncertainty, particularly in one component, that is the pass-through in high energy costs at wholesale level into retail level, to assume that inflation has actually reached it peak,” she continued. “It would surprise me.”
Lagarde said that the ECB would expect to raise rates further to try to get inflation down to the two percent target, while also predicting that economic growth will “continue weakening” into the first quarter of 2024.
Media reports suggest the ECB Governing Council is divided on the speed of rate rises. With inflation running at 10.6 percent in October, some analysts back decisive action to get it under control and restore price stability. Others favour smaller hikes, amid fears it could make a looming recession ever worse.