FRANKFURT, June 11 (Reuters) - The European Central Bank raised interest rates for the first time in nearly three years on Thursday, by a quarter point to 2.25%, to try and curb inflation before a surge in energy costs triggered by the Iran war spreads across the euro zone economy.
Following are highlights of ECB President Christine Lagarde's comments at a news conference after the policy meeting.
BROADENING INFLATION
"We are beginning to see a broadening of inflation throughout the economy, and that
is obviously in terms of direct effect but also in terms of indirect effect - not yet at this point in the front of the second-round effects, but we are going to be extremely attentive.
"And when we see for instance that the delivery dates, that the smoothness of supply is beginning to be impaired, obviously we will be attentive to those sort of ancillary indicators that would help us understand where it is heading."
MUST NOT GO NORTH OF TARGET
"On all accounts our decision (to hike rates) stands, and if we were not taking that very obvious monetary policy decision, then at the end of the medium term, that we look out for projection purposes, we would be north of our target."
NEUTRAL RATE NOT DISCUSSED
"We have not discussed the neutral rate, nor the range of neutral rate."
MORE ON RATE DECISION
"The decision we've made is not a 'forceful' decision... 25 basis points is a decision which clearly is a signal and is necessary given the economic situation that we have, given the uncertainty that we are navigating."
ON THURSDAY'S RATE DECISION
"I've read here and there that the ECB will make an "insurance decision"... "a preemptive rate decision" (but) it's not at all the way we had our discussion.
"Our discussions were predicated on, obviously, the major energy shock that we have observed since the beginning of March, that is enduring longer than expected by geopolitical experts, and which we are beginning to see broadening throughout the economy... And as I said, we will be monitoring attentively any further consequences of this major energy shock."
UNANIMOUS RATE DECISION
"The decision that we took today to raise by 25 basis points our three interest rates was a unanimous decision without reservation. We did not discuss or debate any other alternative proposal."
CLOSELY MONITOR ENERGY PRICES, INFLATION EXPECTATIONS
"The longer energy prices stay high, the more likely they are to drive up broader inflation through indirect and second-round effects.
"We will therefore closely monitor the size and persistence of the energy price increase and how it feeds through to price and wage setting, inflation expectations and overall economic dynamics."
UNDERLYING INFLATION
"Some indicators of underlying inflation have already been driven higher by the energy shock. Inflation expectations over shorter horizons remain well above levels before the outbreak of the war in the Middle East. At the same time, most measures of longer-term inflation expectations stand at around 2%, supporting the stabilisation of inflation around target in the medium term.
"The increase in energy prices will lift inflation further over the summer and keep it well above target into the first half of 2027."
DOWNSIDE GROWTH RISKS DUE TO WAR
"The risks to the growth outlook are to the downside, mainly owing to the war in the Middle East, which has added to the volatile global policy environment, prolonged disruption of energy supplies could increase energy prices further and for longer than currently expected.
"These factors would erode real incomes even more and make firms and households more reluctant to invest and spend.
"The drag on growth would intensify if the closure of major shipping routes were to cause acute shortages of key inputs that forced euro area firms to curtail output.
"A worsening of global financial market sentiment or a tighter supply of credit could dampen demand, additional frictions in international trade could also further disrupt supply chains, reduce exports, and weaken consumption and investment."
WAGE GROWTH
"The ECB's wage tracker and surveys on wage expectations continue to indicate that wage growth should ease over the year."
DIGITAL EURO
"It is... essential to swiftly adopt the regulation on the establishment of the digital euro."
MANUFACTURING AND LABOUR MARKET
"Manufacturing has held up so far. In part, this is because firms have been building up stocks to cope with supply chain pressures. It also reflects higher defence spending.
"The labour market remains resilient. Unemployment at 6.3% in April remains close to historical lows. The first quarter saw additional jobs being created, although at a slower pace than in the last quarter in 2025.
"Labour demand has cooled further, and firms and households expect the labour market to weaken."
SURVEYS POINT TO SLOWDOWN
"The war in the Middle East is weighing on activity, and surveys are pointing to a slowdown, especially in services."
(Reporting by Reuters Global News Desk)
