ECB set for rate hike as Lagarde vows: ‘We will do what we have to do’

ECB set for another rate hike as Lagarde steps up inflation fight with vow to ‘do what we have to do’

The head of the European Central Bank (ECB) said ‘we will do what we have to do’ to get inflation back under control as officials paved the way for another bumper interest rate rise next month.

On another dramatic day on financial markets, ECB president Christine Lagarde (pictured) vowed to keep putting up rates as eurozone inflation soared to a record 9.1pc.

‘We have [to] return inflation to 2 per cent in the medium term, and we will do what we have to do, which is to continue hiking interest rates in the next several meetings,’ she told a conference in Frankfurt, as the euro crashed to a new 20-year low against the dollar, hitting $0.9537 before recovering.

Drastic action: ECB president Christine Lagarde (pictured) vowed to keep putting up interest rates as inflation in the eurozone soared to a record 9.1%

With markets in a febrile mood – and the Bank of England intervening in the gilt markets to restore calm – lagarde’s fellow ECB members have argued the case for another 0.75 percentage-point rate rise in the eurozone in October, following its first hike of that magnitude this month. 

Slovak central bank governor Peter Kazimir said: ‘We have to be vigorous, even ruthless, regardless of the looming recession.’

Robert Holzmann, Austria’s central bank governor, also backed a 0.75 percentage-point move.

Inflation, as elsewhere in the world, has spiralled in the eurozone since the pandemic and invasion of Ukraine by Russia. 

The ECB raised rates for the first time in over a decade in July, from minus-0.5 per cent to zero, before hiking them again to 0.75 per cent this month.

Another move of this scale would leave rates at 1.5 per cent next month.