ECB won´t be rushed on raising rates, Lagarde says

The European Central Bank does not need to rush interest rate hikes because inflationary pressures were coming from the so-called supply side of the economy, Christine Lagarde said.

Speaking in an interview with Bloomberg, the ECB's chief said the euro area was not seeing "surging demand", rather "“It’s definitely an inflation that is fuelled by the supply side of the economy."

So while it was necessary to move in the correct direction, there was no need for haste nor panic, she added.

Citing people familiar with the matter, Bloomberg also reported that comments from Lagarde the day before that interest rates would start to rise in July and be out of negative territory by the end of September had bothered some of her colleagues.

That was because it in effect appeared to rule out the possibility for a 50 basis point hike at some point.

Lagarde reportedly did not let herself be drawn on that question.

She did however indicate that further rate hikes before 2022 was out were possible.

Lagarde also downplayed recession risks, pointing to "rock bottom" unemployment rates, large household savings and the likelihood of a strong summer tourism season to back up her case.

The euro recovered from earlier losses on the back of her remarks and was up by 0.17% to 1.0709 as of 1008 GMT. having earlier reached an intraday high of 1.0736.