Lagarde says ECB raised rates as energy drives inflation higher
The ECB president said a quarter-point rate rise earlier in September was a measured response to energy-driven inflation, which has not yet fed through into wages.
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At a hearing of the European Parliament’s economic affairs committee on 28 September, Lagarde said the ECB had raised all three of its key interest rates by 25 basis points at a meeting earlier in the month. She described the increase as a measured response aimed at keeping inflation on course to stabilise at the bank’s 2% medium-term target. [1]
Euro-area headline inflation rose to 3.2% in August from 2.9% in July, Lagarde said. Energy inflation climbed to 14.3%, while inflation excluding food and energy edged down to 2.4%. She said higher energy prices had lifted the ECB’s outlook for inflation in 2027 and 2028, but there was no evidence yet of those costs feeding into higher wages. [1]
The ECB’s September staff projections put average headline inflation at 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. [1]
Turning to artificial intelligence, Lagarde cited an ECB estimate that swift, broad adoption could add 0.3 to 0.4 percentage points a year to euro-area productivity growth over the next decade. She said its longer-term effect on employment remained uncertain. [1]
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