Lagarde Downplays Aggressive Rate Hikes Amid Surging Energy Prices

European Central Bank (ECB) President Christine Lagarde has played down market expectations of aggressive interest rate hikes in response to surging oil and gas prices. She emphasized that ECB's interest rate decisions would not directly follow movements in energy prices, but rather consider the impact on economic growth, consumption, and other economic indicators.

Lagarde made these comments at a press conference in Dublin on Friday (18 September) after ECB Vice-President Boris Vujcic also sought to temper investor expectations of interest rate hikes. He stated that the ECB would consider a broader range of economic indicators before determining its next policy move.

The market currently expects the ECB to raise interest rates three to four more times over the next year, following two increases in recent months. However, Lagarde signalled that the ECB does not see a need for aggressive action yet and is taking a measured approach to respond to current conditions.