ECB boss Christine Lagarde warns of more rate rises to fight inflation

The boss of the European Central Bank has warned that it must keep raising interest rates to fight inflation despite the threat of recession.

Speaking a day after figures showed inflation in the eurozone at a record 10.7 per cent, Christine Lagarde said: ‘We are determined to do what is necessary to bring inflation back to our 2 per cent target.’

The ECB has raised interest rates by a combined two percentage points over the past three meetings – taking them from minus 0.5 per cent to plus 1.5 per cent.

Rates are expected to hit 3 per cent next year.

‘The destination is clear, and we are not there yet,’ Lagarde said without specifying where rate rises might end. 

‘We will have further rate increases in the future. The longer inflation stays at such high levels, the greater the risk that it spreads throughout the economy.’

But the eurozone could be hit by recession as the soaring price of everything from energy to food hits households and businesses. 

Germany, which has been the driving force of the European economy for years, has suffered particularly badly because of its reliance on Russian gas.

The eurozone economy slowed sharply in the third quarter of the year, growing by just 0.2 per cent having expanded by 0.8 per cent in the previous three months.