Lagarde: The European Central Bank will maintain restrictive interest rates if necessary, and has not yet discussed a rate cut

Lagarde, the president of the European Central Bank, reiterated that borrowing costs would remain high for as long as necessary, even in a troubled economy, to keep consumer prices in check. "Our future decisions will ensure that the ECB's key interest rate remains at a sufficiently stringent level if necessary," Lagarde said on Monday. Monetary easing is unlikely in the short term. Ms Lagarde echoed earlier comments by saying that the prospect of a rate cut was not even under consideration.

She did not specify how long that period might be, but said "we are in a long race". "We remain determined to ensure that inflation returns in time to our 2 per cent medium-term objective," Ms Lagarde said. She reiterated the ECB's policy statement this month, which raised interest rates for the tenth time this month and pushed them up to 4 per cent.

Most economists and investors see the level as the culmination of more than a year of interest-rate hikes by the European Central Bank to tame inflation. Some of the governing council has endorsed that assessment, and Pablo Hernandez de Cos, the governor of the Bank of Spain, reiterated on Monday that if interest rates remain high enough, current price levels should bring price growth back to its 2 percent target.

Francois Villeroy de Galhau, the governor of the Bank of France, said the ECB should not force the economy "until it collapses" - suggesting the ECB prefers not to raise interest rates further.

Ms Lagarde also acknowledged that the ECB's actions were causing pain, particularly for the 30 per cent of households with variable-rate mortgages. "Our job is to get inflation back to target in time," she said. "The faster this can be achieved, the more stable prices will be and the less pain there will be for investors and borrowers alike."

However, some officials are unsure whether interest rates have peaked. Bundesbank President Joachim Nagel said last week that it was premature to make such a statement because inflation was still too high and was expected to decline only slowly.

A key challenge is judging how the economy will respond to the 450 basis points of monetary tightening implemented since July 2022. The outlook for the eurozone has deteriorated recently, especially in Germany. Although data released by the Ifo Institute for Economic Research on Monday showed that business confidence in Germany improved only slightly in September, it remains at historically low levels. "Eurozone economic activity is clearly slowing," Isabel Schnabel, a member of the European Central Bank's executive board, said on Monday.

However, monetary easing is unlikely in the short term. Ms Lagarde, echoing earlier comments, said such a prospect was not even on the table. "We are not talking about a rate cut," she said. "The Governing Council is not talking about a rate cut."