Lagarde says euro-area inflation will remain high in coming quarters

European Central Bank President Christine Lagarde said inflation in the euro area is likely to remain high over the coming quarters, according to Bloomberg and See.News. She warned that the longer inflation stays elevated, and the higher it rises, the greater the risk to the ECB’s medium-term inflation objective, the outlets reported, citing an interview with Japan’s Yomiuri Shimbun.

Lagarde said the bank would examine the detailed October inflation breakdown before making its next interest-rate decision, Briefs.co reported. The outlet said officials were weighing a possible 25-basis-point increase in December. It also reported that the ECB had taken two actions after energy prices rose following the Iran war. The ECB’s decision involves balancing efforts to contain inflation against the risk of weakening growth in the 21-country euro area, Briefs.co said.

The reports gave different details on October inflation. Briefs.co said core inflation was 2.5%, unchanged from September, and that headline inflation was about twice the ECB’s 2% target. See.News reported that headline inflation reached 4% that month, with higher energy prices accounting for most of the increase. It said Lagarde cautioned that the headline figure should be assessed alongside its underlying components.

On whether price increases could spread into wages and other costs, Lagarde said there were no signs of additional second-round effects beyond those already included in the ECB’s projections, according to Briefs.co and See.News. Bloomberg likewise reported that she described those effects as no worse than anticipated. Briefs.co said the ECB was monitoring inflation’s underlying components as it assessed the outlook and considered its next rate decision.