PARIS, Feb 8 ― The European Central Bank will take its time to assess new data before tightening its monetary policy any faster, its president said Monday, amid fierce speculation that the bank would raise rates sooner than previously expected.

“There is no need to rush to any premature conclusion at this point in time,” Christine Lagarde told a European Parliament committee, with the bank under pressure from soaring inflation in the eurozone. 

The pace of price rises in the bloc unexpectedly rose to 5.1 per cent in January, the highest since records for the currency club began in 1997, having sat at five per cent in December.

At the end of a meeting of the ECB’s governing council on Thursday, Lagarde failed to repeat a previous assessment that a rate hike was “very unlikely” in 2022.

Instead, the ECB’s decision would be “data-dependant” and would follow the bank’s plan to end asset purchases before hiking rates, Lagarde said.

The ECB last week also confirmed its decision to follow a “step-by-step” reduction in bond buys over the course of the year

Her response sent waves through financial markets, pushing up yields on government debt in the eurozone and bringing forward expectations that the ECB would quickly raise interest rates.

At the hearing, Lagarde “tried to put the hawkish genie back into the bottle” after Thursday’s ECB meeting by pushing back against early rate hike expectations, said Carsten Brzeski, head of macro at the ING bank.

Members of the ECB’s governing council would “look very carefully” in March at the bank’s new inflation and growth forecasts, before plotting its next move, Lagarde said at the committee.

Early survey and market-based data suggested that “chances have increased that inflation will stabilise at our target” of two-per cent, she said.

The ECB president also underlined that the countries in the eurozone “do not show the same signs of overheating that can be observed in other major economies,” nodding to the United States and Britain where central bankers have moved to sharply tighten monetary policy.

In response to a question on yields, Lagarde said the ECB would use “any instruments that is needed in order to make sure that our monetary policy is properly transmitted”.

Southern European countries with higher debt loads are particularly sensitive to rising yields, which influence how affordably they can finance their spending. ― AFP