Lagarde Keeps Options Open on Interest Rate Hikes Amid Eurozone Uncertainty

European Central Bank (ECB) President Christine Lagarde has stated that she does not rule out further interest rate hikes, despite lower growth in the eurozone. The ECB recently set its neutral interest rate at 2.5%, which coincides with the level to which rates have been raised this week.

Lagarde emphasized that the neutral interest rate is a theoretical reference and not the sole determinant of monetary policy. She also noted that the current economic environment, marked by high inflationary pressure and geopolitical uncertainty, is not ideal for setting rates.

The ECB's decision to raise interest rates by 25 basis points to 2.5% was justified by the persistence of inflationary pressures. Markets had already anticipated this move, and Lagarde stated that the ECB's decisions are made with complete autonomy from investors' expectations.