European Central Bank head: Inflation may linger for longer

The head of the European Central Bank said record inflation could linger for “longer than expected” and avoided repeating that an interest rate increase was all but ruled out this year.

Asked twice by journalists on Thursday, Christine Lagarde declined to reiterate her previous statement that a rate increase was “very unlikely” this year.

She said officials would pay careful attention to the numbers and revisit their inflation stance at their March meeting.

At the same time, she said the bank would stick with its road map for withdrawing economic stimulus, which leaves little room for a rate hike this year.

Any hike would have to follow the end of bond purchases, slated for October at the earliest.

And she maintained her view that the primary factors behind high inflation were expensive oil and gas and supply chain logjams, which could ease this year.

Ms Lagarde spoke after the bank left interest rates and stimulus programmes unchanged even as the other central banks move to counter inflation with interest rate hikes.

The Bank of England on Thursday raised rates for the second time in three months, while US Federal Reserve is expected to start a series of rate rises in March.