Senior central bank officials on both sides of the English Channel made significant remarks regarding monetary policy. European Central Bank President Christine Lagarde once again defended the June rate hike decision, while Bank of England Monetary Policy Committee member Catherine Mann acknowledged that upside risks to inflation remain substantial, suggesting aggressive action may be warranted under certain conditions.
In an interview with French newspaper Les Echos on July 2, Lagarde stated, “We are confident we made the right decision,” reinforcing her view that last month’s rate hike was appropriate. She also explained that “in April, a majority of the Governing Council was ready to make a decision, but we did not have all the necessary information.” The interview, distributed via the Bloomberg Terminal, shed light on the background behind the ECB’s policy decision.
Lagarde further noted that while supply shocks are spreading throughout the economy, “second-round effects are not currently materializing,” expressing the view that a wage-price spiral has not yet emerged.
On the other hand, the BOE’s Mann reflected in remarks late on July 2 that regarding the June policy decision, “upside risks to inflation were greater compared to downside risks to economic activity.” She stated, “If realized data, particularly figures on inflation expectations, prove unfavorable for the underlying inflation process, taking aggressive action can help bring inflation expectations and realized data closer to the 2% target,” making clear her position that aggressive tightening may be necessary depending on circumstances.
Mann also noted, “Second-half data will be particularly important to me,” signaling her intention to closely monitor upcoming economic indicators.
Both the Eurozone and the United Kingdom continue to face persistent inflationary pressures, keeping the policy operations of both central banks firmly in the market spotlight. The ECB has not ruled out the possibility of additional tightening following its June rate hike, while the Bank of England continues to raise rates at a pace exceeding market expectations. The remarks by Lagarde and Mann serve to reaffirm both central banks’ strong commitment to bringing inflation under control.