European Central Bank President Christine Lagarde said Tuesday that inflation is still too high and it's still too early for her organization to declare victory over consumer price rises.

Speaking at the Sintra central banking event in Portugal, she said: "Inflation in the euro area is too high and is set to remain so for too long. But the nature of the inflation challenge in the euro area is changing."

Headline inflation in May came in at 6.1% for the region, down from 7% in April. But the ECB's target is to bring inflation down to 2%.

The euro area has faced higher inflation rates mainly in the wake of Russia's invasion of Ukraine, which drove up energy costs across the bloc. However, those have dissipated in recent months and the biggest price jumps have been in food products instead.

The ECB has raised rates since July 2022 amounting to 400 basis points so far. Market players have priced in another rate increase next month and are considering another move for September.

Some economists are also raising questions about when the ECB might have to reverse this tighter policy as they fear that higher rates will slow the economy considerably. However, Lagarde suggested Tuesday that it is too early to make such considerations.

Source : CNBC