ECB shouldn't react to inflation spike: Lagarde

"When inflation pressure is expected to fade - as is the case today - it does not make sense to react by tightening policy," she said. "The tightening would not affect the economy until after the shock has already passed."

Tightening policy now would squeeze household incomes, which are already facing a shock from soaring energy costs that will likely dampen growth, she added.

"In this situation, tighter monetary policy would only exacerbate the contractionary effect on the economy," she said.

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