Lagarde plays down recession risks, says ECB is ready to 'move faster' on rates if needed

European Central Bank President Christine Lagarde said the central bank can raise rates faster, if needed.

Christine Lagarde, the president of the European Central Bank, said on Tuesday that her team is ready to raise rates at a faster pace if inflation continues to rise.

The annual conference of the central bank in Portugal is focused on rising consumer prices. A headline inflation rate of 6.8% is expected for the euro zone this year.

Economists are assessing whether or not the euro zone will escape a recession this year. There have been a number of factors that have affected growth levels in the region.

The forecasts for growth have been revised down. Lagarde said that they are still expecting positive growth rates because of the domestic buffer.

A new tool was announced by the European Central Bank at an emergency meeting. There were questions about the timing and magnitude of the mechanism.

The investors are worried about high inflation and have been watching what the European Central Bank is doing. The high levels of debt in Europe and how a return to tighter monetary policy could become a financial constraint for these economies are concerns for investors.

If the inflation outlook doesn't improve, we will have enough information to move faster.

In an interview with CNBC, the global chief economist at UniCredit said he doesn't expect this year's forum to address the disparity between public debt levels.

Is it possible to raise interest rates even if inflation is high? He said that would be strange.

The European Central Bank said in June that it would hike rates after the summer. It would mark a huge moment for the central bank, which has kept rates below zero since the beginning of the year.

There are questions on whether Lagarde will follow through with multiple rate hikes. The euro zone is expected to have a GDP rate of 2.8% this year, but economists are starting to talk about the possibility of a recession by the end of the year because of Russia's invasion of Ukraine.

The Federal Reserve in the US is in the same situation.

He said that there was a high chance that the Fed would cut rates at the end of next year.

"They can't implement what they are saying, they will do the next one and maybe one more hike, but then it is going to be really difficult for them, both in the US and Europe," he said.