European Central Bank President Christine Lagarde defended the June 11 quarter-point rate increase, stating it was not merely an 'insurance hike' but a necessary response to rising headline and core inflation. Without the move, she warned inflation could have remained above the 2% target into 2028. The ECB raised its benchmark rate to 2.25%, its first change in a year, with euro area annual inflation at 3.2% in May and a return to target now projected only in late 2027. Lagarde emphasized the bank would not need the jumbo half-point and three-quarter-point hikes used during the energy crisis, instead adopting a measured, meeting-by-meeting approach amid fluctuating price pressures from the Iran war and Strait of Hormuz disruptions. She noted improved forecasting allows the ECB to calibrate responses to geopolitical scenarios without over- or underreacting.