ECB's Lagarde says bond sell-off will slow growth

European Central Bank President Christine Lagarde said Monday that higher long-term interest rates would slow eurozone growth after a sell-off in sovereign debt pushed bond yields higher.

Speaking at a European Parliament hearing in Brussels, Lagarde said long-term rates had risen notably since the ECB's September 10 meeting. She said that would weigh on growth, while also potentially reducing inflation pressure by limiting how higher energy costs spread through the wider economy.

Lagarde said there was not yet evidence that inflation was spreading beyond energy prices more broadly. She said the ECB remained on a “middle path” for monetary policy and viewed a measured response as appropriate.

The ECB raised interest rates on September 10, its second increase this year, as inflation rose in the 21 countries using the euro. Eurozone consumer prices increased 3.2 percent in August and are projected to rise further this month.

The yield on the 10-year German bund, the eurozone benchmark, was above 3.6 percent on Monday, its highest level since 2009. Bond yields rise when prices fall. US Treasury yields also reached multi-year highs last week.