Lagarde says ECB will raise rates 25bp in July

Speaking at the ECB Forum on Central Banking, Christine Lagarde said that the ECB will go as far as necessary to ensure that inflation stabilises at their 2% target.

Lagarde also said that longer-term inflation expectations currently stand at around 2% across a range of measures. However, in the shorter-term inflation pressures are intensifying and broadening through the eurozone economy. This is due to inflation starting to take root in the services sector and unemployment in the euro area being at a record low.

She reiterated the ECB’s plan to raise their three key interest rates by 25 basis points at the 21 July ECB meeting but said that a larger increment may be appropriate at the September meeting.