ECB Maintains Middle Path Amid Higher Inflation Forecasts
European Central Bank President Christine Lagarde advocated for a measured monetary response to manage inflation as the bank raises its long-term inflation forecasts.
European Central Bank President Christine Lagarde announced that the bank views a "measured response" as appropriate to keep inflation in check. While Lagarde noted that growth has been broad-based across most sectors and countries and the labor market remains robust, she warned that the economic outlook remains highly uncertain.
The European Central Bank now expects higher inflation for 2027 and 2028 than previously forecasted. Lagarde stated there are no signs that this inflation is becoming embedded, and the bank intends to maintain the middle path for monetary policy established earlier this year. She asserted that current shocks are too large to ignore.
Following these comments, the euro declined 25 pips to 1.1364.
