European Central Bank President Christine Lagarde said inflation pressures remain powerful and borrowing costs will be raised further to tackle them.

With the full effects of the ECB's action to date still materializing, Lagarde reiterated that there's no clear evidence that underlying inflation has peaked. Food inflation remains elevated, she told European Union lawmakers in Brussels.

"Price pressures remain strong," Lagarde said Monday. "Our future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2% medium-term target and will be kept at those levels for as long as necessary."

ECB officials are stressing that while their historic bout of interest-rate increases is nearing its conclusion, it's not over just yet. Despite the gauge of core inflation that they've been monitoring closely easing for a second month in May, they're flagging another hike on June 15. That's in line with the views of most investors and economists.

Ireland's Gabriel Makhlouf has said the ECB is likely to raise at its June and July meetings, bringing the deposit rate to 3.75% from 3.25% now. Ignazio Visco, the more dovish head of Italy's central bank, said at the weekend that "would have pushed for a more gradual approach" to hikes, which have already totaled 375 basis points since last July.

Discussing euro-zone banks following the wider turbulence in that industry, Lagarde was optimistic.

"Financial stability in the euro area has proved robust so far, but we continue to assess possible risks, taking into account a wide range of indicators," she said. "We do not see a trade-off between financial stability and price stability in the euro area."

Source : Bloomberg