By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde said on Saturday that the ECB faced “massive uncertainty” over the Middle East war and needed more data before deciding whether to raise interest rates in June.

Speaking to Spanish broadcaster RTVE, Lagarde declined to confirm whether the Governing Council would tighten policy next month, despite market expectations of a hike.

“What defines the current circumstances is massive uncertainty,” she said. “We have established that our decision will be based on the depth, duration and repercussions of the crisis we are suffering. Before taking any decision, we need more data, to understand more where prices are heading.”

Lagarde said the ECB was weighing the risk of moving too soon against the risk of moving too late.

“We are constantly divided by the risk of reacting too quickly and the risk of reacting too late,” she said. “We have to find the right path for our economy to navigate toward the 2% medium-term inflation target, which is our goal.”

Asked how the ECB could avoid mistiming its response, Lagarde said: “We do not want to act either too early or too late, but just in time.”

The uncertainty was being amplified by sudden shifts in the Middle East situation, including market reactions to statements by U.S. President Donald Trump, Lagarde said without naming him directly.

“One tweet and the situation improves; another tweet and the situation worsens,” she said. “We have to pay attention to this but also to the long-term impact of this phenomenon on the economy.”

Asked whether tweets could condition ECB monetary policy, Lagarde said they could not do so directly, but could affect markets and the geopolitical situation.

“No, but yes the perception of markets, and quite a lot; and probably the geopolitical situation,” she said. “For that reason, we have great uncertainty.”

Lagarde said the Eurozone economy was between the ECB’s baseline and adverse scenarios for the fallout from the war.

“We are between the baseline scenario and the adverse one,” she said. “The price of oil is higher today than in the baseline scenario, but the price of gas is lower. We have to adjust constantly and update the scenarios to deal with this uncertainty.”

Lagarde did not reject market expectations of multiple hikes, saying markets were looking at the same factors as the ECB and trying to anticipate developments in a similar way.

“The markets look at the same aspects, try to anticipate in the same way and have similar data,” she said.

Second-round effects were one of the ECB’s main concerns, Lagarde said, referring to the risk that the energy-driven inflation shock could spread through wages and prices for goods and services.

She also pointed to the lag with which rate hikes affect the economy. According to ECB estimates, the effect of monetary tightening comes through after six to 12 months, she said.

Lagarde said households with mortgages or those considering taking out a mortgage should negotiate as much as possible and make banks compete with each other.

She said she hoped households would face interest rates they could afford within their budgets, “as they are now.”

Asked about speculation over whether she would leave the ECB before the end of her term in October 2027, Lagarde said she was focused on her current job.

“For the moment, I am doing my job, which is very serious, and carrying out the mission of containing inflation for the people of the Eurozone,” she said.

Asked about speculation that former Banco de España Governor Pablo Hernández de Cos could be a candidate to succeed her, Lagarde called him “a wonderful guy” but declined to endorse anyone.

“It is not for me to decide, but for the [European] leaders, and I must refrain from pointing to anyone,” she said. “I know that they are already in the full race.”