ECB says inflation still set to remain too high for too long

The European Central Bank raised interest rates as expected, but judged that inflation was still set to remain too high for too long.

Nonetheless, as ECB President, Christine Lagarde, said at her post-meeting press conference, the central bank was now in 'data dependent' mode.

She also stated that the policy decision at the next meeting, in September, might be a hike or a pause but would in any case depend on economic conditions.

"We want to break the back of inflation [...] come what may," Lagarde said.

That would also be true for subsequent meetings, she stressed.

Financing conditions had however continued to tighten and were dampening demand, the ECB said in its policy statement.

"The developments since the last meeting support the expectation that inflation will drop further over the remainder of the year but will stay above target for an extended period.

"While some measures show signs of easing, underlying inflation remains high overall."

Lagarde also went on to explain that monetary policy was now starting to be transmitted "strongly".

During her presser and in response to another journalists' question, Lagarde said that she would not say that the ECB had more ground to cover at the moment.

Instead, it was incoming information that would inform her opinion in September and at later meetings.

But neither was the ECB declaring victory, its President said.

The interest rate on the main refinancing operations, the marginal lending facility and the deposit facility were all raised by 25 basis points to 4.25%, 4.50% and 3.75%, respectively.

-- More to follow --