{"id":680962,"date":"2026-03-25T15:02:15","date_gmt":"2026-03-25T15:02:15","guid":{"rendered":"https:\/\/www.europesays.com\/us\/680962\/"},"modified":"2026-03-25T15:02:15","modified_gmt":"2026-03-25T15:02:15","slug":"ecb-ready-to-hike-rates-even-if-inflation-surge-is-short-lived","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/680962\/","title":{"rendered":"ECB ready to hike rates even if inflation surge is short-lived"},"content":{"rendered":"

European Central Bank (ECB) President Christine Lagarde addresses the media after the ECB’s Governing Council meeting, at the ECB headquarters in Frankfurt, Germany, Sept. 11, 2025. <\/p>\n

Kai Pfaffenbach | Reuters<\/p>\n

The head of the European Central Bank said Wednesday that policymakers stand ready to hike interest rates even if an expected jump in euro zone inflation proves temporary.<\/p>\n

ECB President Christine Lagarde said a “not-too-persistent” rise in inflation could trigger a hike after the bank was forced to upgrade expectations for euro zone inflation, which is now forecast to rise above the 2% target.<\/p>\n

“If the shock gives rise to a large, though not-too-persistent, overshoot of our [inflation] target, some measured adjustment of policy could be warranted,” Lagarde told an audience at “The ECB and Its Watchers” conference in Frankfurt, Germany.<\/p>\n

“To leave such an overshoot entirely unaddressed could pose a communication risk: the public may find it difficult to understand a reaction function that does not react,” she added, without giving a timeline or criteria for when the central bank might deem an interest rate hike necessary.<\/p>\n

Before the Iran conflict erupted in late February, the euro zone’s inflation rate had dipped below the central bank’s 2% target. In February, however, the rate ticked up to 1.9%<\/a>. <\/p>\n

The war, and Tehran’s retaliatory and almost total block of the Strait of Hormuz, have sent global oil and gas prices soaring and upended inflation forecasts in Europe.<\/p>\n

\"ECB<\/p>\n

The ECB said last week — when it kept its key deposit rate at 2% \u2014 that it now expected headline inflation to average 2.6% in 2026, 2% in 2027 and 2.1% in 2028 in its baseline scenario<\/a>. <\/p>\n

In its more “adverse” scenario, the central bank warned that inflation could peak at 4% this year while in the most “severe” base case<\/a> (assuming a stronger and more persistent energy price shock and further significant destruction of Gulf energy infrastructure), the rate could peak above 6% early next year.<\/p>\n

“If we expect inflation to deviate significantly and persistently from target, the response must be appropriately forceful or persistent,” Lagarde said Wednesday. <\/p>\n

Separately on Wednesday, the ECB’s chief economist Philip Lane said companies’ price-hike expectations and wages for new hires were some of the key inflation indicators that the ECB will monitor.<\/p>\n

There are already signs that the war in Iran is harming business confidence and activity, with private sector output in the euro zone’s manufacturing and services sectors sinking to a 10-month low in March, according to S&P Global\u00a0flash purchasing managers’ index data<\/a> released on Tuesday.<\/p>\n

Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"European Central Bank (ECB) President Christine Lagarde addresses the media after the ECB’s Governing Council meeting, at the…\n","protected":false},"author":3,"featured_media":680963,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[12],"tags":[266351,267855,78,64,81,21572,79,266,273283,259093,83,285698,261908,64216,6769,269092,279254,67,259090,132,68,261909],"class_list":["post-680962","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-lco26q","tag-ng26j","tag-breaking-news-economy","tag-business","tag-business-news","tag-christine-lagarde","tag-economy","tag-inflation","tag-invesco-db-commodity-index-tracking-fund","tag-invesco-db-oil-fund","tag-iran","tag-ishares-core-msci-europe-etf","tag-ishares-msci-eurozone-etf","tag-lp","tag-prices","tag-sp-global-inc","tag-state-street-spdr-euro-stoxx-50-etf","tag-united-states","tag-united-states-oil-fund","tag-unitedstates","tag-us","tag-vanguard-ftse-europe-index-fund-etf-shares"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116290423779598910","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/680962","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=680962"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/680962\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/680963"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=680962"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=680962"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=680962"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}