Arab Press

بالشعب و للشعب
Tuesday, Mar 17, 2026

ECB’s Lagarde tells governments to back off and keeps tightening

ECB’s Lagarde tells governments to back off and keeps tightening

The central bank chief warned governments against spending too heavily to shield their people from high energy prices.

European Central Bank chief Christine Lagarde rebuffed EU leaders’ criticism of her monetary policy approach on Thursday, delivering another big interest rate hike in a bid to fight red-hot inflation in the eurozone.

“We have to do what we have to do,” Lagarde said during her press conference after the ECB raised rates by a whopping 75 basis points to 1.5 percent, bringing it to the highest level since 2009. “A central bank has to focus on its mandate. Our mandate is price stability.”

In its fastest tightening cycle on record, the ECB has now raised rates by a total of 2 percent over its last three meetings — and more is to come, according to a statement following the policy meeting in Frankfurt.

The bank’s Governing Council “expects to raise interest rates further, to ensure the timely return of inflation to its 2 percent medium-term inflation target,” it said.

The comments from Lagarde, a former French finance minister, followed a series of critical remarks from EU leaders.

In the week up to the meeting, French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni and Portuguese Finance Minister Fernando Medina all expressed worries over the speed at which the ECB is raising interest rates and the implications this may have on growth. Earlier in the month, similar criticism came from Finnish Prime Minister Sanna Marin.

“I’m concerned to see lots of experts and certain European monetary policymakers explaining to us that we need to break demand in Europe to better contain inflation,” Macron told Les Echos in an interview earlier this week. “One must be very careful.”

Lagarde, who has previously said the ECB may have to raise rates to a level where they hurt growth, said the bank was willing to raise rates beyond neutral levels, where interest rates neither boost growth in order to ensure price stability.

But she did not say at which pace and to which level interest rates will move.

Her broader comments, however, will cement market expectations of a slowdown in tightening ahead.

Not only did she drop the reference to rate hikes over the “next several meetings” from her statement, but she also noted that “the Governing Council has made substantial progress in withdrawing monetary policy accommodation.”


Warning to governments


In addition, she said that policymakers will consider the rising risk of a recession and its dampening impact on inflation as well as the fact that previous tightening moves will only work with a lag, meaning that the full impact of previous hikes has yet to play out.

This does not mean that tensions won’t flare up again between the ECB and eurozone capitals.

“ECB President Lagarde put more emphasis on recession risks at today’s press conference,” said Commerzbank economist Jörg Krämer. “But due to persistently high inflation data as well as de-anchored inflation expectations, another big rate hike in December remains on the table.”

Despite the recent measures to placate inflation in the Eurozone, tensions might flare up again between the ECB and EU capitals


Lagarde doubled down on her demands that governments ensure fiscal measures remain limited as otherwise even more aggressive ECB action will be in store. Germany and other governments are providing generous subsidies to shield their populations from major increases in energy prices.

“I must have repeated many, many times the famous triple-T, which is temporary, targeted and tailored,” she said. “Which, from our perspective, will help them address the needs of the most affected by income erosion and also by inflation, but without fueling inflation on a broad basis, because that would be utterly counterproductive in that it would require that we take harder monetary policy measures in order to deliver on our mandate.”

At the same time, governments should pursue fiscal policies that show they are committed to gradually bringing down high public debt ratios, Lagarde said. Recent market turmoil in the United Kingdom has shown what happens when fiscal policy goes on a collision course with a central bank fighting red-hot inflation.

ECB relations with fiscal authorities will no doubt remain a key focus in the coming months, not least because Lagarde signaled the Governing Council will agree on principles of reducing its massive government bond holdings at the December meeting that indebted member countries have relied on heavily.

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Saudi Arabia Targets South African Professionals in New Recruitment Drive Amid Regional Uncertainty
Formula One Faces Major Financial Hit as Bahrain and Saudi Arabian Grands Prix Cancelled Amid Middle East Conflict
U.S. and Saudi Firms Launch Local Production of Attritable Drone Systems in Saudi Arabia
Saudi Arabia and UAE Warn Rising Gulf Tensions Could Endanger Regional Security
Saudi Arabia Rejects Claims It Encouraged Prolonged War With Iran
Saudi Arabia to Host World’s Largest Single-Cell Protein Plant as Food Security Push Accelerates
Saudi Crown Prince Urges Trump to Continue Military Pressure on Iran
Iran Intensifies Drone Campaign Against Saudi Arabia as Gulf Conflict Escalates
When Is Eid al-Fitr 2026? Saudi Arabia Awaits Moon Sighting to Confirm End of Ramadan
When Is Eid al-Fitr 2026? Saudi Arabia Awaits Moon Sighting to Confirm End of Ramadan
Iranian Missile Strike Damages Five U.S. Refueling Aircraft at Saudi Air Base
Iranian Missile Strike Damages Five U.S. Refueling Aircraft at Saudi Air Base
Washington State Pilot Among Six U.S. Airmen Killed in Military Aircraft Crash Over Iraq
Severe Storm Threat Looms Over Washington as Tornado Risk and Damaging Winds Target Mid-Atlantic
Trump Supports FCC Warning to Broadcasters Over Iran War Reporting
Trump Supports FCC Warning to Broadcasters Over Iran War Reporting
Saudi Stocks Edge Lower as Tadawul All Share Index Slips Slightly at Market Close
Iranian Missile and Drone Strike Targets Saudi Arabia’s Prince Sultan Air Base Hosting US Aircraft
Saudi Air Defenses Intercept Drone Over Eastern Province as Iranian Strike Campaign Intensifies
Middle East War Reshapes Gulf Economies as Saudi Arabia and Oman Gain Strategic Leverage While UAE Faces Economic Shock
Iranian Ambassador in Riyadh Blames ‘Enemies’ for Attacks Across the Gulf
Israeli Envoy Ron Dermer Reportedly Visits Saudi Arabia for Discussions on Potential Lebanon Talks
Formula One Cancels Bahrain and Saudi Arabian Grands Prix Scheduled for April
Iran’s Ambassador in Riyadh Rejects Claims Tehran Targeted Saudi Oil Facilities
Saudi Arabia Declares 2026 ‘Year of Artificial Intelligence’ in Major Push for Data-Driven Economy
Saudi Arabia’s 2018 Budget Signals Strong Push for Non-Oil Economic Growth
Pakistan Envoy in Riyadh Says Regional Diplomacy Intensifying to Prevent Wider Middle East War
Saudi Arabia Intercepts Dozens of Drones as Regional Strikes Kill Two in Oman
Saudi Arabia Redirects Oil Exports to Red Sea Ports as Strait of Hormuz Tensions Escalate
Saudi Arabia Intercepts Missile and Drone Barrage as Regional Conflict Intensifies
Iran Expands Drone and Missile Campaign Across Gulf as Conflict With US and Israel Intensifies
Muslims Worldwide Await Saudi Moon Sighting to Confirm Eid al-Fitr 2026 Date
F1 Calendar Faces Major Disruption as Middle East Conflict Threatens Bahrain and Saudi Races
Trump Says Most US Aircraft Hit in Saudi Base Attack Suffered Minimal Damage
Trump Says Most US Aircraft Hit in Saudi Base Attack Suffered Minimal Damage
Strait of Hormuz Crisis Forces Saudi Arabia Into Major Oil Production Shut-In
Strait of Hormuz Crisis Forces Saudi Arabia Into Major Oil Production Shut-In
Saudi Arabia Slashes Oil Output as Strait of Hormuz Crisis Cuts Deep Into Gulf Revenues
Saudi Arabia’s Cultural Scene Presses Ahead as Nation Navigates Regional War
Saudi-Pakistan Defence Pact Faces Real-World Constraints as Iran War Escalates
Saudi Arabia Offers Two Million Barrels of Crude From Red Sea as War Disrupts Gulf Exports
Formula One Faces Tens of Millions in Lost Revenue if Bahrain and Saudi Arabia Races Are Cancelled
Formula One Set to Cancel Bahrain and Saudi Arabian Grands Prix Amid Escalating Middle East War
Saudi Arabia Downs Dozens of Iranian Drones in Major Defensive Operation
Saudi Arabia Cuts Oil Output by About Twenty Percent as Iran War Disrupts Gulf Energy Flows
Formula One Set to Cancel Bahrain and Saudi Arabian Grands Prix Amid Escalating Iran War
Asian Energy Security Tested as Strait of Hormuz Disruption Threatens Oil Supplies
Iran Sets Three Conditions for Ending Regional War as Diplomatic Efforts Intensify
Saudi Arabia Launches Royal Institute of Anthropology to Examine Social Transformation
Pakistan’s Prime Minister Shehbaz Sharif Arrives in Saudi Arabia for High-Level Talks
×