ECB President Christine Lagarde opened the door wider to a June rate hike after signaling that the central bank’s inflation forecasts are likely to move higher again. Lagarde said the ECB’s March projection of 2.6% inflation for 2026 “will probably be revised,” noting that “the situation has evolved” since those estimates were published.
Although Lagarde avoided directly committing to tighter policy, she stressed that policymakers must “look at all the data available” and evaluate “whether action is needed.” She also reiterated that the ECB’s objective is “2% medium term,” reinforcing that inflation credibility remains central to policy discussions.
The comments are likely to strengthen market conviction that the ECB will raise rates by 25bps next month. Several policymakers have already hinted that prolonged energy-driven inflation risks could force the Governing Council to act sooner rather than later.
