23:29 - 22.06.2026

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June 22, Fineko/abc.az. European Central Bank (ECB) President Christine Lagarde stated that the central bank does not need to deploy a harsher monetary policy tightening cycle to counteract the economic spillover of the Middle East conflict.

According to ABC.AZ, speaking to lawmakers at the European Parliament in Brussels, Lagarde indicated that consumer inflation expectations have not unanchored. The ECB President noted that this stabilization trend gives the Governing Council confidence that appropriate macroeconomic interventions will structurally guide inflation from its current mark above 3% back down to the 2% medium-term target.

Core Macroeconomic and Monetary Vectors:

• Money Market Pricing and Rate Trajectory: Institutional allocators are actively assessing whether the ECB will deliver subsequent rate hikes following its first structural tightening shifts since 2023. Despite near-term diplomatic de-escalation updates between the US and Iran, interest rate desks are still pricing in at least a quarter-point (25 bps) increase in the deposit rate this year, which would push the benchmark to 2.5%.

• Core Inflation Pressures: Data finalized last week revealed that core inflation—excluding highly volatile energy and food components—strengthened to 2.6% in May, up from 2.2% logged in April. Commenting on these metrics, Lagarde noted that while the geopolitical shock is too large to ignore, the central bank remains highly agile and well-positioned to manage regional uncertainties without jeopardizing its price stability mandate.