Lagarde Defends ECB's Meeting-by-Meeting Approach Amid Rising Energy Prices

European Central Bank President Christine Lagarde recently stated that higher energy prices do not directly lead to interest rate hikes. According to her, the ECB also considers the effects on economic growth and consumption when making decisions. This assessment is part of the bank's meeting-by-meeting approach, which means each decision will be based on available data.

Lagarde made these comments during a press conference at the Eurogroup in Dublin, where she defended the ECB's recent decision to raise interest rates by 0.25 percentage points. The deposit facility rate is now 2.50%, effective from September 16. She emphasized that the relationship between energy prices and interest rates is not mechanical.

The bank's experts have estimated average inflation of 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028, but this assumes the energy shock will dissipate. A more persistent increase in prices could lead to higher inflation and weaker economic growth than predicted.