Lagarde keeps the door open for further ECB rate hikes in World Economy News 15/06/2026 The ECB has done it. Today, it became the first major central bank to increase interest rates as part of the fight against stagflationary pressures triggered by the war in the Middle East. It opted for a 25bp hike, bringing the deposit interest rate to 2.25%. To be clear, this rate hike is more of a symbolic move to signal the ECB’s willingness and determination to avoid being too late in carrying out its policy response. It’s not a rate hike that will derail the eurozone economy, but a decision made with clear communication and reputation in mind; the risk of doing nothing and potentially falling behind the curve is larger than the risk of any adverse effects on growth from higher interest rates, as suggested by Chief Economist Philip Lane in a recent speech. More stagflationary pressures in staff projections but no reason for aggressive hikes During the press conference, ECB President Christine Lagarde mentioned the broadening of inflationary pressures and indirect effects as the main reason for today’s rate hike. Still, we can’t shake the idea that the ECB is actually fighting ghosts from the past – more specifically, its reaction that came far too late in responding to the inflation shock in 2021 and 2022. Remember that, at the time, the central bank lingered too long on the idea that an inflation surge driven by supply shocks was ‘transitory’ and could be looked through. If not for the experience of 2022, “transitory” could well be the label used today. So far, the increase in headline inflation has remained moderate. And while the knock-on effects of higher energy prices on other prices (e.g., transportation and food) will be hard to avoid, the latest survey-based inflation expectations have actually come down slightly. This relatively well-behaved inflation trajectory is also reflected in the ECB’s latest staff projections. Headline inflation is expected to come in at 3.0%