ECB: Lagarde and Lane consistent with further tightening

Research evidence excerpt

ECB: Lagarde and Lane consistent with further tightening

J P M O R G A N Europe Economic Research

23 June 2026

ECB: Lagarde and Lane

consistent with further tightening

Both President Lagarde and Chief Economist Lane have made appearances at the Economic and Policy Research

European Parliament over the past 24 hours. Some of the headlines this has Greg Fuzesi

generated may appear mixed, but overall we view their comments and the latest (44-20) 7134-8310

data as consistent with further tightening. We remain comfortable with our forecast greg.x.fuzesi@jpmorgan.com

of another (and final) hike in September. A few messages stand out: J.P. Morgan Securities plc

• Growth resilience. Both Lagarde and Lane acknowledged an impact of the

Iran war on growth, but they emphasized the distortions caused by the Irish data

in 1Q26, saw pre-war resilience in the economy and appeared comfortable with

staff forecasts that show only temporary weakness. Both pointed to solid

private balance sheets, a resilient labour market, fiscal support (mainly via

defence and infrastructure spending) and that companies were investing in new

technologies. This sense of resilience helped the ECB deliver its recent rate

increase and that will likely be reinforced by today’s composite PMI. On an

ex-Ireland basis, we would put the PMI’s signal for ex-Ireland GDP growth at

0.5%ar for 2Q25, but with June signaling improvement to a 0.6%ar and hence

stronger than the 0.4%q/q saar expected in the staff’s baseline for 3Q26. In

brief, improving growth makes it easier to raise rates.

• Spillover to broader inflation. On inflation, Lagarde and Lane both saw a

spillover of the energy shock to underlying inflation and shorter-term inflation

expectations. They also noted more benign factors, such as anchored longer-