London Daily

Focus on the big picture.
Thursday, Jun 18, 2026

Lagarde no longer ruling out an interest-rate hike this year

Lagarde no longer ruling out an interest-rate hike this year

European Central Bank’s chief delivered surprisingly hawkish comments Thursday, citing data on unexpected record inflation.

European Central Bank President Christine Lagarde is no longer ruling out an interest-rate hike this year, a pivot toward the tightening stance of global peers that officials privately see materializing with a shift in policy guidance as soon as next month.

Investors brought forward bets on ECB action as the monetary chief delivered surprisingly hawkish comments citing unexpected record inflation data, contrasting with an earlier statement on Thursday that kept intact its formal view that price increases will ease.

She spoke after policy makers agreed that it’s sensible no longer to exclude a rate move in 2022, and that bond buying could end in the third quarter, according to officials familiar with their thinking who asked not to be identified because such discussions are confidential. An ECB spokesman declined to comment.

Those views were reflected in Lagarde’s public remarks, though she also insisted the Governing Council won’t rush to conclusions on its formal stance, telling reporters at a virtual press conference to wait for upcoming meetings for a fuller judgment. That will now include a reassessment of its asset purchases next month.

“Concern was across the board,” she said, explaining officials’ reaction to another record reading for euro-zone inflation released the previous day. “Our March meeting, and then later on, our June meeting will be critically important to determine whether the three criterias of our forward guidance are fully satisfied.”

The comments point to sands shifting under the ECB’s monetary stance at a time of accelerating global tightening. Until now, Frankfurt policy makers had protested at investor bets on the prospect higher borrowing costs this year.

Earlier on Thursday, the Bank of England raised rates by a quarter point, in a decision where only the opposition of Governor Andrew Bailey prevented an even bigger move. The U.S. Federal Reserve is also poised to remove stimulus.


“Compared with our expectations in December, risks to the inflation outlook are tilted to the upside, particularly in the near term,” Lagarde said. “There was also a concern and a determination around the table not to rush into decision unless we had a proper and thorough assessment based on data and the analytical work that will take place in the next few weeks.”

The euro extended gains to more than 1%, set for the biggest advance in more than a year. Investors briefly priced in a 10-basis-point hike as soon as June, and up to 40 basis points of tightening by year-end.

The news briefing turned out “more hawkish than expected, with Lagarde opening up the possibility of material changes in ECB policy following the forecast round in March,” Evercore ISI strategist Krishna Guha said in a report.

Consumer prices in the euro area jumped an annual 5.1% in January, surpassing economist estimates by the most in at least two decades and remaining more than double the ECB’s 2% target.

Lagarde said there were signs that supply bottlenecks that have held back manufacturing firms and pushed up costs are easing, though they will persist for some time.

While the president acknowledged that measures of underlying inflation had risen, their persistence is uncertain, she said. Wage growth — deemed a key factor for faster price increases in the medium term — remains “muted overall,” she said.

Comments

mike 4 year ago
Oh dear! The money becomes less valuable.

Newsletter

Related Articles

0:00
0:00
Close
Health Authorities Warn of Rising Cases of Seasonal Respiratory Illnesses
BAE Systems and Rolls-Royce Advance Multi-Nation Fighter Aircraft Programme
National Archives Publish Declassified Documents on Cold War Energy Security Planning
British Retail Spending Rises Despite Continuing Cost-of-Living Pressures
Wales Launches Social Housing Pilot to Address Affordability Pressures
British Energy Companies Commit £5 Billion to Geothermal and Hydrogen Projects
Northern Ireland Debates Cross-Border Healthcare Partnership With the Republic of Ireland
UK Establishes National Artificial Intelligence Safety Centre With Leading Universities
UK Reports Decline in Small Boat Crossings After Expanding Intelligence Cooperation With France
Scottish Parliament Launches Inquiry Into Delays to Renewable Energy Projects
National Crime Agency Dismantles Alleged Multi-Million-Pound Money Laundering Network in London
Transport Strikes Disrupt Rail and Bus Services Across Northern England
United Kingdom and European Union Open New Security Dialogue on Defense and Border Cooperation
Bank of England Holds Interest Rates at 5% as Services Inflation Remains Elevated
UK Government Unveils Major National Health Service Reform Focused on Decentralization and Performance Funding
Government Advances New Airport Slot Rules to Ease Airline Operating Constraints
BBC Opens Flagship Science-Fiction Franchise to Competitive Production Bids
Chancellor Meets City Leaders Amid Concerns Over Gilt Market Liquidity
Rathbones Shares Fall Seventeen Percent After Regulatory Review Reveals Compliance Failings
United Kingdom Joins Group of Seven Initiative Using Artificial Intelligence and Quantum Computing for Cancer Research
Parliament Debates Doubling Tax Allowance for Pensioners After Major Public Petition
Measles Cases Exceed Seven Hundred in London and the West Midlands
British Military Leadership Faces Parliamentary Scrutiny After Defence Secretary's Sudden Resignation
House of Lords Begins Debate on Steel Industry Nationalisation Legislation
Parliament Advances Bill to Abolish NHS England and Create Single Patient Records
Parliament Fast-Tracks National Security Bill to Expand Powers Against Foreign Threats
United Kingdom and European Union Set July Summit to Deepen Post-Brexit Cooperation
United Kingdom Imposes Seventy New Sanctions on Russia and Expands Support for Ukraine's Nuclear Sector
United Kingdom Announces Social Media Ban for Children Under Sixteen
0British Government Investigates Reports of Russian Warship Firing Warning Shots Near Isle of Wight
UK Supreme Court Revises Legal Definition of Deprivation of Liberty
King’s Birthday Honours Recognise Contributions Across Science, Culture and Public Service
UK Ministry of Defence Reports Interdiction of Russian Shadow Fleet Vessel
UK and US Launch Joint Regulatory Programme for Medicines and Healthcare Products
Solicitor General Refers Murder Sentence to Court of Appeal Under Unduly Lenient Scheme
UK Launches £1.6 Million Mobile Museum Initiative to Expand Cultural Access
Judicial Pay Structure Undergoes Government Review Following Senior Recommendations
Government Confirms Nearly 180 New Youth Hubs Across the United Kingdom
UK Government Expands Careers Support Through Partnership with LinkedIn
Digital News Report Highlights Growing Global Concern Over AI and Information Overload
UK Chancellor Reaffirms Fiscal Discipline and Borrowing Reduction Strategy
UK Government Invests £219 Million in Sustainable Aviation Fuel Development
Rolls-Royce Small Modular Reactors Secures Major Swedish Export Contract
Government Confirms Locations for Nearly 180 Youth Hubs Across Great Britain
UK Government Partners with LinkedIn to Expand Employment Support Services
Reuters Institute Report Flags Rising Public Anxiety Over News and Information Overload
UK Government Commits £219 Million to Expand Sustainable Aviation Fuel Industry
Chancellor Convenes Market Engagement Group to Assess UK Economic Outlook and Productivity Risks
Rolls-Royce Wins Multibillion-Pound Swedish Contract for Small Modular Nuclear Reactors
Government to Ban Social Media Access for Under-Sixteens Across the United Kingdom
×