ECB Could Hike Again Even After a Pause, Lagarde Tells Le Figaro

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(Bloomberg) — Any pause at an European Central Bank monetary-policy meeting could be followed by another increase in interest rates, according to President Christine Lagarde.

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At the next meeting in September, “there could be a further hike of the policy rate or perhaps a pause,” she told Le Figaro newspaper. “A pause, whenever it occurs, in September or later, would not necessarily be definitive.”

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The comments come after the ECB last week hiked rates by another quarter-point, with Lagarde stressing that decisions from here will depend on incoming data. She reaffirmed that stance in Sunday’s Figaro interview.

“We are in an environment of uncertainty and will reassess the situation and our action on a meeting-by-meeting basis,” she said. “We are committed to returning inflation to our target in a timely manner and for this we need a sufficiently restrictive policy in terms of level and length.”

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Economists still predict the ECB will raise borrowing costs one more time — just not necessarily in September.

Euro-area figures due Monday are set to show that inflation in the region stood at 5.3% in July, according to the median forecasts of economists. Their estimates suggest that an underlying gauge stripping out volatile elements such as energy exceeded that measure for the first time since early 2021, reaching 5.4%. 

Those numbers will be released alongside gross domestic product data that may show the euro zone returned to growth in the three months through June, as an unexpectedly buoyant French economy made up for stagnation in Germany.

“The second-quarter GDP figures for France, Germany and Spain are quite encouraging,” Lagarde was cited as saying. “They support our scenario of GDP growth of 0.9% in the euro area this year.”