European Central Bank chief signals more rate hikes ahead

European Central Bank head Christine Lagarde said Monday that price pressures are “strong” and made clear that the bank will raise interest rates high enough to bring down inflation and keep them there “for as long as necessary.”

Lagarde’s remarks reinforced her earlier statements indicating the ECB was not done raising rates even after inflation fell by almost a full percentage point in May, to 6.1%. The ECB has been hiking rates at the fastest pace in its history, launching its drive in July 2022 as inflation headed for record highs.

While energy prices are falling and food prices have started to ease from high levels, “there is no clear evidence that underlying inflation has peaked,” Lagarde told the European Parliament’s economic and monetary affairs committee in Brussels.

“Our future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2% medium-term target and will be kept at those levels for as long as necessary,” she said.