European Central Bank President Christine Lagarde said on Thursday that inflation is set to remain higher for longer than expected, but it is temporary and price growth is set to ease over the course of next year. "While the current phase of higher inflation will last longer than originally expected, we expect inflation to decline in the course of next year," Lagarde said in the introductory statement to the post-decision ECB press conference. Earlier on Thursday, the Governing Council left its key interest rates and forward guidance unchanged. The ECB expects Eurozone inflation, which hit a 13-year high of 3.4 percent in September, to rise further this year. Core inflation accelerated to 1.9 percent in September. Lagarde attributed the acceleration to surging energy prices and the recovery in demand that is out-pacing constrained supply.
Base effects related to the end of the VAT cut in Germany are still contributing to higher inflation, the ECB chief added. Policymakers expect the influence of these factors to ease in the course of next year or to fall out of the year-on-year inflation calculation. Wage pressures are also expected to climb as the economic recovery progress.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.