Lagarde flags ECB inflation forecast revision ahead of June 11 rate decision
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ECB president Christine Lagarde says the bank's March inflation forecast of 2.6% for 2025 will probably be revised upward when policymakers meet in June, confirming signals from other council members. Earlier: ECB's Kocher warns June rate hike unavoidable if Hormuz stays shut ECB
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4 itemsLagarde’s comments at the press conference clearly point to September rate hike
The ECB appears increasingly poised for a September rate hike, supported by President Lagarde's recent comments highlighting rising inflation concerns. Per the full note [source], the ECB's policy direction has shifted towards a more hawkish stance, citing heightened upside inflation risks as oil prices surge. This overall tilt indicates potential volatility in EUR pairs, particularly against the USD as traders adjust their expectations for tightening monetary policy in the Eurozone.
Lagarde keeps the door open for further ECB rate hikes
The desk interprets today’s press conference as a strategic signaling maneuver by the ECB, indicating a readiness to consider additional rate hikes in response to rising inflationary pressures. As President Lagarde noted, while the latest 25 basis point increase to 2.25% may seem modest, it effectively lays the groundwork against potential economic stagnation amidst broader inflationary concerns. Per the full note from ing-think, this shift is partly a response to past hesitations in tackling inflation, which Lagarde acknowledged. Given the ECB's historical context, traders should be mindful of the potential for further tightening if inflation dynamics worsen, especially as external geopolitical factors continue to reflect inflationary trends in Europe.