Lagarde no longer believes that inflation will decline

Central bank conference in Sintra

ECB President Christine Lagarde and her US counterpart Jerome Powell.

(Image: via REUTERS)

Sintra Christine Lagarde is convinced that inflationary dynamics in the euro area have changed permanently. “I don’t think we will return to a low inflation environment,” the president of the European Central Bank (ECB) said in Sintra at a conference of his central bank on Wednesday.

There he talked about the latest developments and current challenges during a panel discussion with US Federal Reserve Chairman Jerome Powell, his British counterpart Andrew Bailey, and Bank for International Settlements (BIS) head Agustin Carstens.

Lagarde stressed that the ECB has had to contend with too low inflation and other framework conditions over the past decade. “But this is absolutely not what is happening now.” The Russian invasion of Ukraine will also change the environment in which the ECB operates.

In the medium term, the head of the ECB hopes that the inflation rate will stabilize at the two percent target set by the central bank.

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