Lagarde says rising bond yields will slow eurozone growth

ECB President Christine Lagarde says rising bond yields are making borrowing costlier across the eurozone.

She said long-term interest rates have risen noticeably since the European Central Bank’s latest meeting, tightening financing conditions.

Higher borrowing costs are expected to slow economic growth and make it harder for companies to pass on higher costs, including fuel expenses linked to the Iran war.

Government bond yields have risen worldwide amid concerns about public debt and inflation, as well as strong demand for investment in artificial intelligence.

The ECB has raised its key rates twice in four months, and another increase to 2.75% is expected in December.

ECB policymakers say further rate rises may be needed to contain inflation, while warning that higher energy prices could later feed into wages; there are no signs of that effect so far.