ECB’s Lagarde says inflation will stay high and a December move cannot be guaranteed, as successor candidate de Cos urges vigilance

Inflation is likely to remain high in the near future, European Central Bank President Christine Lagarde told the Japanese newspaper Yomiuri Shimbun^1,2. She said euro-area inflation will remain elevated over the coming quarters^3,4.

Lagarde said the bank cannot currently guarantee a change in its interest rate decision in December⁵, and she sees little reason to alter the rate course⁴.

The interview also covered cooperation between the ECB and the Bank of Japan². Lagarde spoke of the work central banks do together in bodies such as the Financial Stability Board and the Bank for International Settlements⁶.

Separately, Pablo Hernández de Cos, one of two candidates in the running to replace Lagarde as ECB president, said vigilance is needed on inflation risks^7,8.

Why it matters to investors

Lagarde’s remarks point to a central bank that expects price pressure to persist and is not ready to commit to a new step. Her warning of persistently high inflation across Europe in the coming quarters³ leaves the outlook for euro-area rates tied to incoming data rather than to forward guidance⁵.

The comments from de Cos matter because he may lead the bank next. The former Spanish central bank governor, who now heads the Bank for International Settlements, framed his warning around energy prices that remain high because of the Iran war⁹. His message on inflation risks lined up with Lagarde’s^1,7.

For bond and currency markets, two senior voices stressing inflation risk, the sitting president and a leading candidate to succeed her, offer no signal of a turn toward easier policy^4,7. Lagarde said she sees little reason to alter the rate course⁴, and de Cos said vigilance is needed⁷.

What to watch

The next ECB policy meeting is the immediate test. Lagarde has said a December move cannot be guaranteed⁵, so investors will watch inflation data and energy prices for signs of how the board leans^4,9.

The succession race is the second thread. De Cos is one of two candidates for the presidency⁷, and his emphasis on vigilance⁸ gives markets an early sense of how he might approach policy if chosen.

Energy is the third. De Cos tied his concern to the effect of the Iran war on energy prices⁹, and any shift in those prices will shape both the inflation path Lagarde described¹ and the debate over the next rate decision⁵.