In an interview conducted by Hironari Akiyama on Nov. 4, European Central Bank (ECB) President Christine Lagarde warned that inflation would remain high in coming quarters, with greater persistence increasing risks to the medium term target. She reiterated that monetary policy decisions would depend on data at each meeting, without committing to a December action. Higher global borrowing costs also reinforced the need for heavily indebted euro area countries to comply with fiscal rules. October headline inflation reached 4%, largely reflecting energy inflation of 20.8%, up from 18.9% in September, amid the Middle East conflict and reduced global refinery capacity. Underlying indicators remained broadly stable. Core inflation, excluding energy, food, alcohol and tobacco, was unchanged at 2.5%, while services inflation edged up to 3.3% but remained within its range of the previous four months. There was no evidence of wage developments generating second-round effects beyond those already incorporated in projections. The detailed inflation breakdown would help establish whether services pressures reflected energy intensive sectors or broader indirect effects. Higher energy futures prices and long-term interest rates would inform the next forecast, but Lagarde declined to prejudge the outcome. Highly indebted euro area countries were particularly exposed to rising global borrowing costs, making compliance with the fiscal framework more pressing. Asked about possible use of the Transmission Protection Instrument, Lagarde ruled out no tool in advance. Any intervention would depend on the relevant criteria and conditions and a Governing Council judgment, rather than an unconditional commitment to act.

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