By Marta Vilar – MADRID (Econostream) – European Central Bank President Christine Lagarde said late Thursday that she did not know whether the ECB would raise interest rates again at one of its upcoming meetings but added that she had “a general sense” of the direction monetary policy would take.

In an interview with French newspaper Les Échos, Lagarde said she was “confident that we made the right choice” in raising interest rates in June.

She said “a large majority” of Governing Council members had already been prepared to tighten policy in April but had wanted additional information before acting. The data received since then had confirmed the ECB’s assessment, she said.

“We are facing an external supply shock that is currently spreading to the rest of the economy and whose indirect effects we can already see,” she said. “We are also keeping a close eye on the risk of second-round effects, even though they have not yet materialized.”

Lagarde said underlying inflation continued to accelerate, partly because services inflation had reached 3.5%, compared with the 3% expected in the ECB’s June projections.

“When you have rising inflation, rising services prices and inflation projections of 3% for 2026, 2.3% for 2027 and 2% for 2028, the monetary policy decision seemed clear,” she said, adding that the same conclusion held even under the milder scenario.

Addressing concerns that tighter monetary policy could slow the economy excessively, Lagarde noted that the ECB had reduced its growth forecast by only 0.1 percentage point. She also pointed to unemployment remaining close to record lows, continued—albeit slower—employment growth and a resilient financial sector.

“I have to say that we considered lowering our growth forecasts a little more,” she said. “But the national central banks, who contributed to the June economic projections, saw sufficient signs of growth in activity.”

On speculation that she could leave the ECB before the end of her term, Lagarde said her mandate ran until October 2027 and argued that, given the challenging environment, “I believe the captain of the ECB ship must stay on board.”

Asked whether she could reconsider her early departure if conditions became calmer and potentially participate in the French political debate ahead of the 2027 presidential election, she replied: “It’s possible.”

She said that “a European voice needs to be heard in the French presidential debate,” adding that it was “certainly possible” to have a frank discussion with some of the candidates while remaining at the helm of the ECB.

When asked whether she could become directly involved in the campaign, either by supporting a candidate or running herself, Lagarde said, “I will reflect on it.”

Pressed on that remark, she clarified that she had been joking and added: “I don’t think that’s currently on the agenda.”

 

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