"Our work is not done. Barring a significant change in our outlook, we will continue raising rates in July," she told an ECB forum in Sintra, Portugal.

"In the near future, it is unlikely that the central bank will be able to say with certainty that rates have peaked," Lagarde added.

The guardian institution of the euro decided at its last monetary policy meeting in June on an eighth increase in its key rates in less than a year, by a quarter of a percentage point, to raise its reference rate on deposits to 3.5%.

On this occasion, Christine Lagarde had qualified as "very likely" the prospect of a rate hike in July, for its next meeting.

The ECB embarked a year ago on this unprecedented cycle of monetary tightening to counter soaring prices and some voices are now calling for a pause so as not to weigh further on economic activity.

ECB © interest rates Samuel BARBOSA, Valentin RAKOVSKY / AFP

On the contrary, the official warned on Tuesday against a "too rapid reversal of monetary policy" in the face of a "more persistent inflation process" in the euro zone. It stressed the "uncertainty" surrounding the effect of its monetary policies, both in their "duration" and their "level".

Price growth in the euro zone fell to 6.1% year-on-year in May, far from the record of 10.6% reached in October, but also far from the 2% target pursued by the central bank.

"Inflation is rising in the economy in phases, as different economic agents try to pass on costs to each other," Lagarde said.

The phenomenon is now stimulated by rising wages, as part of a "sustainable process of catching up" with purchasing power. "Several years of wage increases await us," Lagarde said Tuesday.

Inflation in the euro © zone Nalini LEPETIT-CHELLA / AFP

She also called on companies to do their part by absorbing "rising labor costs in their margins" rather than raising prices.

"If companies were to regain 25% of the lost profit margin (...), inflation in 2025 would be significantly higher (...) to nearly 3%," she added.

The institution's latest projections published in June forecast inflation at 5.4% this year and then falling to 2.2% (and 2.3% excluding energy) in 2025.

© 2023 AFP