European Central Bank will do everything necessary to bring inflation down to 2%, says Lagarde

Inflation in the euro zone will fall from an all-time high this year and the European Central Bank (ECB) is willing to take the necessary measures to reduce it to its 2% target, said the entity’s president, Christine Lagarde.

Inflation accelerated to 5% last month, the highest on record in the 19-country currency bloc and more than double the target, as rising energy costs and supply constraints pushed up prices for a number of of goods and services.

The ECB has long maintained that price growth will slow on its own, but Lagarde said the ECB could adjust its monetary policy if necessary.

“Our commitment to price stability remains unwavering”, he said in a speech. “We will take all necessary measures to ensure that we meet our inflation target of 2% in the medium term.”

“We understand that rising prices are a concern for many people, and we take that concern very seriously.”, he added.

The ECB extended stimulus last month, arguing that long-term price pressures are actually weaker than high, and that inflation risks falling below its target by the end of the year.

However, several policy makers have questioned this argument, stating that the risks are tilted towards higher readings and that the ECB should start to withdraw its extraordinary support measures.

“We have the necessary flexibility to respond to a series of circumstances”, Lagarde pointed out, adding that the engines of inflation are actually a drag on growth.

“Rising energy prices are weighing on household incomes and dampening confidence, while supply bottlenecks are causing shortages in the manufacturing sector“, he pointed.