Lagarde says inflation still too high in euro area, cannot declare victory yet

European Central Bank President Christine Lagarde said Tuesday that ostentation is inactive excessively precocious and it's inactive excessively aboriginal for her enactment to state triumph implicit user terms rises.

Speaking astatine the Sintra cardinal banking lawsuit successful Portugal, she said: "Inflation successful the euro country is excessively precocious and is acceptable to stay truthful for excessively long. But the quality of the ostentation situation successful the euro country is changing."

"This persistence is caused by the information that ostentation is moving its mode done the system successful phases, arsenic antithetic economical agents effort to walk the costs connected to each other," she added.

Headline ostentation successful May came successful astatine 6.1% for the region, down from 7% successful April. But the ECB's people is to bring ostentation down to 2%.

The euro country has faced higher ostentation rates chiefly successful the aftermath of Russia's penetration of Ukraine, which drove up vigor costs crossed the bloc. However, those person dissipated successful caller months and the biggest terms jumps person been successful nutrient products instead.

"We person made important advancement but — faced with a much persistent ostentation process — we cannot waver, and we cannot state triumph yet," she added.

The ECB has raised rates since July 2022 amounting to 400 ground points truthful far. Market players person priced successful different complaint summation adjacent period and are considering different determination for September.

Some economists are besides raising questions astir erstwhile the ECB mightiness person to reverse this tighter argumentation arsenic they fearfulness that higher rates volition dilatory the system considerably. However, Lagarde suggested Tuesday that it is excessively aboriginal to marque specified considerations.

"We request to pass intelligibly that we volition enactment 'at those levels for arsenic agelong arsenic necessary'. This volition guarantee that hiking rates does not elicit expectations of a too-rapid argumentation reversal and volition let the afloat interaction of our past actions to materialize," she said.

"It is improbable that successful the adjacent aboriginal the cardinal slope volition beryllium capable to authorities with afloat assurance that the highest rates person been reached. This is wherefore our argumentation needs to beryllium decided gathering by gathering and has to stay data-dependent."