The European Central Bank is heading towards an upward revision of its inflation forecasts at its June meeting, as the war in the Middle East has sharply increased energy costs.
ECB President Christine Lagarde said the March forecast, which projected prices rising by 2.6% this year, would “probably be revised”, noting that the situation had “evolved” since then.
Lagarde did not say whether such a revision would bring the ECB closer to raising interest rates at its June 11 meeting.
“The current situation is so uncertain that we need to look at all available data, assess how the economy will develop over the coming quarters, determine whether action is needed and what impact it would have over the medium term,” she said.
Lagarde said the ECB’s goal remains to stabilise inflation at 2% over the medium term, stressing the need to assess economic data before any decision is taken.
Economists and investors largely expect an interest rate increase, while several ECB officials have signalled that such a move could become unavoidable if there is no peace agreement between the United States and Iran.