London Daily

Focus on the big picture.
Monday, Jun 22, 2026

ECB’s Lagarde tells governments to back off and keeps tightening

ECB’s Lagarde tells governments to back off and keeps tightening

The central bank chief warned governments against spending too heavily to shield their people from high energy prices.

European Central Bank chief Christine Lagarde rebuffed EU leaders’ criticism of her monetary policy approach on Thursday, delivering another big interest rate hike in a bid to fight red-hot inflation in the eurozone.

“We have to do what we have to do,” Lagarde said during her press conference after the ECB raised rates by a whopping 75 basis points to 1.5 percent, bringing it to the highest level since 2009. “A central bank has to focus on its mandate. Our mandate is price stability.”

In its fastest tightening cycle on record, the ECB has now raised rates by a total of 2 percent over its last three meetings — and more is to come, according to a statement following the policy meeting in Frankfurt.

The bank’s Governing Council “expects to raise interest rates further, to ensure the timely return of inflation to its 2 percent medium-term inflation target,” it said.

The comments from Lagarde, a former French finance minister, followed a series of critical remarks from EU leaders.

In the week up to the meeting, French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni and Portuguese Finance Minister Fernando Medina all expressed worries over the speed at which the ECB is raising interest rates and the implications this may have on growth. Earlier in the month, similar criticism came from Finnish Prime Minister Sanna Marin.

“I’m concerned to see lots of experts and certain European monetary policymakers explaining to us that we need to break demand in Europe to better contain inflation,” Macron told Les Echos in an interview earlier this week. “One must be very careful.”

Lagarde, who has previously said the ECB may have to raise rates to a level where they hurt growth, said the bank was willing to raise rates beyond neutral levels, where interest rates neither boost growth in order to ensure price stability.

But she did not say at which pace and to which level interest rates will move.

Her broader comments, however, will cement market expectations of a slowdown in tightening ahead.

Not only did she drop the reference to rate hikes over the “next several meetings” from her statement, but she also noted that “the Governing Council has made substantial progress in withdrawing monetary policy accommodation.”


Warning to governments


In addition, she said that policymakers will consider the rising risk of a recession and its dampening impact on inflation as well as the fact that previous tightening moves will only work with a lag, meaning that the full impact of previous hikes has yet to play out.

This does not mean that tensions won’t flare up again between the ECB and eurozone capitals.

“ECB President Lagarde put more emphasis on recession risks at today’s press conference,” said Commerzbank economist Jörg Krämer. “But due to persistently high inflation data as well as de-anchored inflation expectations, another big rate hike in December remains on the table.”

Despite the recent measures to placate inflation in the Eurozone, tensions might flare up again between the ECB and EU capitals


Lagarde doubled down on her demands that governments ensure fiscal measures remain limited as otherwise even more aggressive ECB action will be in store. Germany and other governments are providing generous subsidies to shield their populations from major increases in energy prices.

“I must have repeated many, many times the famous triple-T, which is temporary, targeted and tailored,” she said. “Which, from our perspective, will help them address the needs of the most affected by income erosion and also by inflation, but without fueling inflation on a broad basis, because that would be utterly counterproductive in that it would require that we take harder monetary policy measures in order to deliver on our mandate.”

At the same time, governments should pursue fiscal policies that show they are committed to gradually bringing down high public debt ratios, Lagarde said. Recent market turmoil in the United Kingdom has shown what happens when fiscal policy goes on a collision course with a central bank fighting red-hot inflation.

ECB relations with fiscal authorities will no doubt remain a key focus in the coming months, not least because Lagarde signaled the Governing Council will agree on principles of reducing its massive government bond holdings at the December meeting that indebted member countries have relied on heavily.

Newsletter

Related Articles

0:00
0:00
Close
Reform UK MP Lee Anderson to Raise Pension Concerns Over British Coal Staff Superannuation Scheme
UK Parliament to Debate Newborn Screening for Spinal Muscular Atrophy Following Public Petition
Met Office Warns of Water Safety Risks During Heatwave as Temperatures Peak in England
Treasury Increases Mileage Allowance Payments for 2026–27 Tax Year to 55 Pence Per Mile
UK Government Raises Electricity Generator Levy to 55 Percent in New Revenue Measure
House of Lords Moves Financial Services and Markets Bill to Committee Stage Amid Regulatory Scrutiny
Westminster Hall to Debate Petition on Pro-Israel Influence in UK Politics
UK Parliament Prepares for Estimates Days Debates as Backbench Business Schedule Approved
Armed Forces Bill Nears Final Stages in UK House of Commons With Military Justice Reforms
Donald Trump Comments on UK Political Situation, Citing Immigration and Energy Policy Concerns
Andy Burnham By-Election Victory Fuels Speculation Over Potential Labour Leadership Contest
UK Economy Shows Resilience but Faces Headwinds from Middle East Tensions, UK Finance Says
UK Parliament Opens Week of Debates on Net Zero, Security and Armed Forces Reform
Met Office Issues Amber Extreme Heat Warning as Temperatures Expected to Reach 35C Across England and Wales
Prime Minister Keir Starmer Faces Mounting Leadership Pressure After Makerfield By-Election Defeat
London Hotel Wins World’s Best Afternoon Tea Award at International Hospitality Guide La Liste
Court of Appeal Rules in Favour of Competition and Markets Authority in Phenytoin Drug Case
Chichester Waste Site Suspended After Environment Agency Finds Serious Fire and Pollution Risks
UK Appoints Chris Elmore as Special Envoy on Preventing Sexual Violence in Conflict
Environment Agency Fines Yorkshire Firms Nearly £470,000 for Environmental Permit Breaches
British Chambers of Commerce Says Post-Brexit Trade Deals Have Limited Economic Impact
Resident Doctors to Vote on Government Pay Offer in Ongoing NHS Dispute
UK Public Borrowing Reaches £46.3 Billion in Early Fiscal Year, Driven by Debt Interest Costs
UK Government Unveils £100 Million Package to Strengthen Fire and Rescue Response Capacity
Bank of England Holds Interest Rates at 3.75 Percent Despite Easing Inflation
Met Office Extends Amber Heat Warning as Temperatures Forecast to Reach 38C Across Southern England
Prime Minister Keir Starmer Expected to Resign Amid Mounting Labour Party Pressure
UK Government Tightens Procurement Rules to Prioritise National Security and Supply Chain Resilience
National Drought Group Reviews Water Supply Risks After Dry Spring and Ongoing Heatwave
Andy Burnham Faces Leadership Speculation After Weak Local Election Results for Labour
Charity Commission Appoints Interim Managers to Barnabas Aid Amid Financial Investigation
Government Awards £27 Million Leonardo UK Contract to Maintain Military Aircraft Fleet
Environment Agency Suspends Chichester Waste Site Permit Over Fire and Pollution Risks
Border Force Seizes Record Cannabis Shipment in Major UK Criminal Network Disruption
Lloyds Banking Group to Hire 300 Artificial Intelligence Specialists in Digital Expansion Push
UK Government Introduces Alcohol Monitoring Tags for 7,000 Offenders Ahead of Summer Sporting Season
Resident Doctors in England Prepare Vote on Government Pay and Working Conditions Offer
Police Scotland Investigates Suspected Anti-Muslim Attacks in Edinburgh Following Arrest
Met Office Issues Rare Amber Extreme Heat Warning Across Southern and Eastern England
UK Government Unveils Digital Homebuying Reforms to Cut Costs and Speed Up Property Transactions
Train Driver Dies and 89 Injured in Rail Collision Near Bedford as Safety Investigation Begins
Long-Term Economic and Political Effects of Brexit Continue to Shape UK Policymaking
Digital Disinformation Emerges as a Growing National Security Challenge in the United Kingdom
Britain's Dependence on Global Energy Routes Drives Push for More Resilient Supply Chains
Rising Energy Costs Continue to Threaten Britain's Cost-of-Living Recovery
Concerns Grow Over Far-Right Organizing and AI-Driven Online Radicalization in Britain
UK-Led Global Partnerships Conference Calls for Reform of International Development Finance
Middle East Tensions Continue to Weigh on UK Business Confidence
Reports of Middle East Peace Deal Ease Pressure on UK Energy Prices
UK Warns Middle East Conflict Could Worsen Global Food Insecurity
×