Lagarde Says ECB May Raise Inflation Forecast in June

European Central Bank President Christine Lagarde clearly pointed out in an interview with an Italian television program on Sunday that, due to the change in the macroeconomic situation, the ECB may adjust inflation expectations at next month's policy meeting.

The European Central Bank had predicted an annual price increase of 2.6% in March, and Christine Lagarde said that this figure is likely to be revised for the time being. This latest statement confirms the signals previously released by several monetary policymakers, indicating that concerns about price pressure are rising within the European Central Bank. A member of the ECB's Governing Council, Alexander Demarco, also mentioned in a previous interview with Bloomberg that the inflation forecast released in March occurred at the beginning of the outbreak of the Iran war, and it now seems that the assessment at that time may have been overly optimistic.

Despite the upside risks of inflation, Christine Lagarde still refuses to reveal whether this expectation adjustment will prompt the European Central Bank to make an interest rate hike decision on June 11. She emphasized that the current economic environment has a very high level of uncertainty, and the central bank must closely observe all subsequent data to assess the economic trend over the next few quarters in order to decide whether further action is necessary to ensure that the inflation rate returns to the 2% target in the medium term.

Market institutions and economists currently generally predict that the European Central Bank will raise the interest rate by 25 basis points at next month's meeting. The statements of many central bank policy decision-makers also indicate that if the US and Iran cannot reach a lasting peace agreement, in the context of widespread price increases, raising interest rates may be an inevitable choice.