ECB's Lagarde Says Bond Selloff Will Slow Inflation
European Central Bank (ECB) President Christine Lagarde stated that rising bond yields are tightening financing conditions, slowing economic growth and reducing inflation in the euro zone. Speaking at a conference in Bangkok on October 15, she noted that higher long-term interest rates would make it harder for consumers to absorb increased fuel prices from ongoing geopolitical tensions. The ECB has raised its policy rate twice in four months, with another hike expected in December, pushing the rate to 2.75%, which is seen as restrictive. Joachim Nagel of Germany's Bundesbank suggested further tightening may be necessary depending on incoming data, while Olli Rehn from Finland warned about potential second-round effects from energy inflation impacting wages and other prices.
Topics: bond yields ECB economic growth inflation interest rates