Europe's interest rates to stay high as long as needed to defeat inflation, central bank chief says

European Central Bank President Christine Lagarde is warning that inflation is holding its grip on the economy. She made clear in a speech Tuesday in Portugal that the bank intends to raise rates high enough to “break this persistence” and that they will stay high for as long as needed. Lagarde acknowledged that the inflation rate has fallen thanks to lower energy prices. Businesses initially passed on their rising costs by charging customers higher prices, a phase that's starting to wane. Now, with unemployment low, workers are demanding higher wages to make up for lost purchasing power. That threatens to keep pushing up inflation in a wage-price spiral that the bank must prevent.