3 articles · Updated · The Associated Press · Jun 29
Summary
Christine Lagarde said the ECB’s June 11 quarter-point increase was needed because, without it, inflation could have stayed above the 2% goal into 2028.
Euro area inflation was 3.2% in May, and Lagarde said the bank still sees headline and core price pressures rising, with inflation returning to target only in late 2027 even after the hike.
The ECB raised its benchmark rate to 2.25% in its first move in a year, but Lagarde said future decisions can be made meeting by meeting rather than through the half-point or three-quarter-point jumps used after Russia’s gas cutoff.
That more measured approach reflects improved forecasting and scenario analysis as policymakers weigh volatile oil and gas disruptions tied to the Iran war and Strait of Hormuz risks.
The next tests come at ECB meetings on July 22-23 and Sept. 9-10, with Europe’s economy so far holding up better than expected despite new U.S. tariffs.