European Central Bank President Christine Lagarde said Sunday that while both the U.S. and Europe are struggling to contain soaring inflation, they are also “facing a different beast.”
Lagarde, appearing on CBS’s “Face the Nation,” said the ECB will use “the tools and sequence” most appropriate for taming inflation, which currently includes a wind-down of bond-buying in the third quarter and possible, gradual, interest rate increases.
Spiking inflation in Europe has been exacerbated by Russia’s invasion of Ukraine, which sent the price of fossil fuels soaring for European countries dependent on Moscow for natural gas and oil. Lagarde said 50% of Europe’s current record inflation stems from surging energy costs.
“If I raise interest rates today, it is not going to bring the price of energy down,” Lagarde said.
In the U.S., where the Federal Reserve has already raised rates once and is poised to do so again next month, the inflationary pressure has been made more acute by a “tense” labor market, Lagarde said.