Lagarde: Inflation Well Above Target Into 1H27; ECB Data-Dependent on Further Tightening

ECB President Christine Lagarde’s post-decision press conference kept the focus on an elevated inflation path and a data-dependent stance on further tightening.

Inflation path (Bloomberg live blog)

Bloomberg live blog: Lagarde said inflation is to remain well above target into 1H27, specifying that “for an extended period” means into the first half of 2027, and that inflation should return to around the target toward the end of that year (~13:03Z). Most longer-term inflation expectations stand around 2% (~12:58Z / ~13:01Z).

She added that most measures of underlying inflation were broadly stable in July, and that wages do not show a material response to the energy shock yet (~13:01Z). The improved economic outlook will contribute to slightly higher core inflation, she said (~13:03Z).

Risks / markets (quoted separately)

Bloomberg (~13:05Z): Lagarde said risks to the growth outlook are to the downside, citing the Iran war and Russia’s invasion of Ukraine.

Bloomberg (~13:09Z): “Markets do what they have to do and so do we”; “ECB will do its job.”

Bloomberg note (~13:04Z): the upward revision in the inflation profile, as well as a confirmed data-dependent approach going forward, suggests further ECB tightening may follow.

Prior tape

Follows ECB +25 bp print and post-print EUR/USD ~1.1604 / hot PPI. This is the PC follow, not a reprint of the decision or the PPI package.

Informational only. Not trading advice, signals, or a guarantee of any market outcome.