Lagarde Says ECB Rate Hike Was Driven by Inflation Forecasts
European Central Bank President Christine Lagarde said on Monday that the ECB’s latest interest rate increase was based on updated economic forecasts.
She rejected the idea that the move was a precautionary step designed only to protect against future inflation risks.
Lagarde made the comments during the opening of the ECB’s central banking forum in Sintra, Portugal.
ECB Rate Increase Was Not an “Insurance Hike”
Lagarde directly challenged descriptions of the decision as an “insurance hike.”
She said the rate increase was justified under every economic scenario considered by policymakers.
According to Lagarde, economic developments since the decision have not changed the ECB’s assessment.
Inflation Forecasts Support Tighter Policy
The ECB published new economic projections during its policy meeting earlier this month.
The forecasts showed that both headline inflation and core inflation were expected to remain higher than previously estimated.
Core inflation excludes more volatile items, such as energy and food, and is closely monitored by central banks when assessing underlying price pressures.
Inflation Expected to Reach Target in Late 2027
The ECB’s latest projections suggest that inflation will return to its 2% target only in the final quarter of 2027.
Lagarde said that keeping interest rates unchanged would have allowed inflation to remain above 2% in 2028.
As a result, the central bank concluded that higher interest rates were necessary to bring inflation back under control.
The comments underline the ECB’s continued focus on price stability, despite concerns about economic growth across the eurozone.
