ECB's Lagarde Backs Measured Rate Hikes as Euro Zone Inflation Nears 4%

FRANKFURT — European Central Bank President Christine Lagarde said on Sept. 28, 2026, that a measured policy response remains appropriate, pushing back against market bets for up to four additional rate increases over the next year. Euro zone inflation has surpassed 3% and may approach 4% by year-end, double the ECB's 2% target, following two rate hikes over the summer. Lagarde attributed surging prices primarily to oil and gas costs tied to the US-Iran conflict, telling a European Parliament committee in Brussels there is no evidence of second-round effects feeding into wages. She acknowledged risks are skewed toward higher inflation readings amid high uncertainty. Economists interpret "measured" as hikes spaced roughly three months apart, suggesting the ECB may skip its Oct. 29 meeting and act again in December when new projections are released. Lagarde remained upbeat on the economy, citing solid manufacturing, a robust labor market and investment supporting growth.