The European Central Bank does not need to fight inflation now with the same force it did in 2022-23, Christine Lagarde said on Monday, signalling policymakers believe they can respond with a limited increase to interest rates.
Opening the ECB’s annual Sintra conference, the ECB president said policymakers could now “make measured adjustments to rates, calibrated to the shocks we face”, arguing that Europe’s greater economic resilience had reduced the need for crisis-era monetary policy.
Two weeks after the ECB increased rates for the first time in close to three years in response to the Middle East energy shock, Lagarde stressed that “we no longer need to act with the same force” as in 2022 and 2023, when the central bank embarked on “the fastest tightening cycle in our history”.