Lagarde Defends ECB Rate Hike Decision at Annual Meeting, Emphasizing Eurozone Resilience

(CNA Frankfurt, June 30, Comprehensive Foreign News) European Central Bank (ECB) President Christine Lagarde defended the ECB's decision to raise interest rates this month, the first hike since 2023, to address the impact of the Middle East war, at an annual meeting held in Portugal today.

According to Agence France-Presse, the ECB raised its benchmark interest rate by one quarter percentage point (25 basis points) to 2.25% on June 11, marking the first increase since September 2023. Some economists criticized the rate hike as unnecessary, warning it could put pressure on the weak Eurozone economy.

Lagarde stated in her opening remarks at The ECB Forum on Central Banking, "Our decision to raise rates was justified under all circumstances. It was a well-designed, robust decision. Nothing that has happened since has shaken that judgment."

She indicated that the Eurozone will face more frequent geopolitical shocks, but the region's resilience continues to strengthen, meaning it is better equipped to handle these shocks.

From the COVID-19 pandemic to the Russia-Ukraine war and the conflict in Iran, the ECB has had to repeatedly deal with global turmoil in recent years, threatening its goal of maintaining price stability.

Lagarde said, "And these shocks are taking new forms: market access, energy supply, and critical minerals are increasingly weaponized." However, she emphasized that the Eurozone has demonstrated increasing strength, making it better able to cope with such events.

The ECB Forum on Central Banking is being held this week in Sintra, a town near Lisbon, Portugal, bringing together senior central bank officials from around the world, including U.S. Federal Reserve Chairman Jerome Powell and Bank of England Governor Andrew Bailey, as well as economists. The meeting will continue for several days. (Translator: Kao Chao-fen / Editor: Chen Cheng-chien) 1150630

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