FRANKFURT (Reuters] -The European Central Bank will not raise its interest rates in the next year because inflation is too low. This was stated by Christine Lagarde, President of European Central Bank, Wednesday. The statement reaffirmed market expectations for a rise as early as October.

She stated that “in our forward guidance regarding interest rates, I have clearly articulated three conditions necessary before rates will begin to increase,” at a Lisbon event.

“Despite this inflation spike, inflation prospects for the medium-term remain subdued. These three conditions will not be met next year.”

Lagarde’s remarks come after last week she failed to boost market expectations. Investors had even briefly price two complete moves next year. Then, they retreated to plan for one increase next October.

Lagarde stated that market interest rates rose in recent weeks due to greater uncertainty in the inflation outlook and spillovers from overseas to euro area policy rate expectations. There are also questions regarding the calibration of asset purchases after a pandemic.

Lagarde also reacted to the rise in yields and warned that the ECB would continue using emergency asset purchases to maintain low borrowing costs.

She stated that an undue tightening in financing conditions was not desirable when buying power is being squeezed already by rising fuel and energy bills. It would be unwarranted and a headwind to the recovery.

The likely trajectory of inflation has been a matter of contention between the ECB, financial investors, and other policymakers.

Investors are betting that price inflation will continue to rise, even though the ECB expects prices to fall from levels of above 4% right now and below its 2% target for next year.

Problem is, inflation uncertainty is extremely high. Even Lagarde acknowledged last week that the spike is likely to be much higher than expected and will continue for a longer time than anticipated just a few short weeks ago.