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President of the European Central Bank Christine Lagarde says inflation is still too high.
“Since July last year we have raised interest rates by 350 basis points. However, inflation is still high, and uncertainty around its path ahead has increased. This makes a robust strategy going forward essential,” she said a speech made on Wednesday in Frankfurt, Germany.
The ECB decided last week to shirk off the banking turmoil in Europe and the U.S. and raise its interest rates by a further 50 basis points.
Lagarde explained the move was necessary to “dampen demand” and “keep a firm grip on inflation expectations and ensure they remain anchored.”
But she gave no indication of any upcoming rate hikes.
“With high uncertainty, it is even more important that the rate path is data-dependent. This means, ex ante, that we are neither committed to raise further nor are we finished with hiking rates,” she added.
Ahead of the Federal Reserve’s rate decision on Wednesday and on the eve of the Bank of England’s verdict tomorrow, Lagarde added that the underlying inflation dynamics in the eurozone “remain strong” while headline inflation is likely to “decline steeply” this year, from falling energy prices and easing supply bottlenecks.
She also said that the ECB doesn’t see any clear evidence that underlying inflation is moving downwards. Measures of underlying inflation tracked by the ECB are currently in the 4 -8% range.
The euro edged up against the U.S. dollar
EURUSD,
Read: How bank chaos triggered wild swings in rate expectations ahead of Fed meeting
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