The ECB's future policy rates would be set at sufficiently restrictive levels for as long as necessary to meet its target of bringing inflation down to 2 percent.
On Monday, Christine Lagarde, the president of the European Central Bank (ECB) Christine Lagarde told the European Parliament that the economic activity in the eurozone has stagnated in recent quarters, and is expected to remain weak for the rest of the year.
She attributed the slight contraction of the Eurozone's real gross domestic product (GDP) in the third quarter to a combination of factors, including the "broadening impact of higher interest rates, weak foreign demand and the fading impetus from the reopening of the economy after the pandemic."
However, Lagarde expressed optimism for the bloc's economic resurgence in the coming years, citing a further decline in inflation, recovery in household incomes, and growing demand in the area.
Regarding inflation, Lagarde acknowledged that wages would continue to play a pivotal role in driving domestic inflation.
Inflation has impacted much of the world economy in 2023 �� Major powerhouses such as the US, UK, and the European Union have seen their currencies weaken as a result.— Exness (@EXNESS) November 21, 2023
Which currency will have outperformed the rest by the end of 2023? The dollar, pound, or euro? pic.twitter.com/FCy5xfAVpP
Although she expected the weakening of inflationary pressures to continue, "the medium-term outlook for inflation remains surrounded by considerable uncertainty."
Concerning monetary policy, Lagarde confirmed that the ECB's future policy rates would be set at "sufficiently restrictive levels for as long as necessary" to meet its target of bringing inflation down to 2 percent.
"The appropriate level and duration of restriction will continue to be determined in a data-dependent manner, assessing the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission," she said.
The ECB will ensure price stability, and support the green transition of the Eurozone's economy, Lagarde noted.