ECB President Christine Lagarde said in a speech, “based on the overall outlook, the process of normalizing our monetary policy will continue in a determined and sustained manner.” However, given the uncertainty, “the pace of interest rate normalization cannot be defined ex ante.” She emphasized that the appropriate policy stance has to incorporate the “principles of gradualism and optionality”.
As for policy moves ahead, Lagarde reiterated that ECB will end net asset purchases on July 1, then hike the three interest rates by 25bps at next meeting on July 21. Also, “a larger increment” would be appropriate at the September meeting, “if the medium-term inflation outlook persists or deteriorates”.
Beyond September, the Governing Council has agreed that a “gradual but sustained” path of further rate increases will be appropriate. “The starting point at each meeting will be an assessment of the evolution of the shocks, their implications for the outlook and the degree of confidence we have in inflation converging to our medium-term target,” she said.