European inflation set to remain 'too high for too long': Central bank chief

Although inflation continues to drop, it is still expected to remain "too high for too long," Christine Lagarde, the European Central Bank's governor, said on Monday.

Speaking at the European Parliament's Economic and Monetary Affairs Committee, she said the bank remains determined to reach its medium-term target of 2%.

"To reinforce progress towards our target, we decided to raise our key interest rates by 25 basis points earlier this month," she noted.

The annual inflation rate has been falling continuously since April, reaching 5.2% in August, and is expected to drop to 4.5% in September in the euro area.

The rate saw double-digit levels last year, reaching 10.6% last October.

"Euro area activity broadly stagnated in the first half of 2023, and recent indicators point to further weakness in the third quarter," she also said.

Lagarde underlined that lower demand for euro area exports and the impact of tight financing conditions are dampening growth.