European Central Bank President Christine Lagarde indicated that policymakers are likely to revise their inflation forecasts upward when they meet next month.
Speaking on the Italian talk show "Che Tempo Che Fa" on Sunday, Lagarde stated that the ECB's March projection of 2.6% inflation for this year is "likely to be adjusted." She added that "circumstances have changed" since then.
Lagarde's remarks align with recent signals from other policymakers, including ECB Governing Council member Alexander Demarco. In an interview, Demarco noted that the inflation forecast, issued shortly after the outbreak of the Iran war, may have been overly optimistic.
Lagarde did not elaborate on whether the potential adjustment to the inflation outlook implies that the ECB will raise interest rates at its June 11 meeting.
She commented, "The current situation is highly uncertain. We must examine all available data, assess how the economy will develop over the coming quarters, and determine whether action is needed and what impact such action would have in the medium term. Our goal is to achieve 2% inflation in the medium term."
Economists and investors currently expect the ECB to implement a 25-basis-point rate hike. Many of Lagarde's colleagues have also suggested that a rate increase may be difficult to avoid if the United States and Iran fail to reach a lasting peace agreement.
Comments