ECB will raise its interest rates until inflation falls back to its 2% target

The European Central Bank President Christine Lagarde said in an interview with Germany's Funke Mediengruppe published on Friday. the ECB will raise its interest rates until inflation falls back to its 2% target.

Key notes

The rate hike will only the latest step in our journey to unwind the special measures.
    
We will keep raising rates for as long as necessary to bring inflation down to our target over the medium term.

The governing council will review the situation and decide on the right pace for our next steps depending on the incoming data.

ECB hawk, Robert Holzmann, has also made comments:

• "The economy will grow less strongly, the forecasts point in this direction, that has made us somewhat cautious,"
• "We will see in the autumn what the economic situation is. Then we can probably decide if we do another 0.5% or less."
• ECB is keen to prevent higher inflation expectations becoming entrenched among the general public

Meanwhile, euro bulls have moved in from below parity in a correction of three prior weeks of supply. 

• EUR/USD stalls as the greenback bulls rethink ahead of the Fed