Europe has become more resilient to external shocks, giving the European Central Bank more time to decide when inflation requires another interest rate increase, according to President Christine Lagarde.

Speaking at the ECB’s annual forum in Sintra, Lagarde said stronger banking regulation, improved fiscal frameworks and investment in low carbon energy had helped contain the economic effects of recent disruptions.

She pointed to the collapse of Silicon Valley Bank, US tariffs and the recent oil supply shock as events Europe absorbed without broader financial instability.

That resilience means the ECB may increasingly operate between shocks it can temporarily overlook and those that require a forceful response.

Lagarde said better real time data and more reliable inflation projections allow policymakers to assess whether price pressures are becoming persistent before changing rates.

She also defended the ECB’s June increase, which lifted the deposit rate to 2.25%.

Lagarde said the decision was based on the inflation outlook and was not an insurance move. Nothing observed since then had undermined the reasoning behind it, she added.

Oil prices have fallen as tensions between the US and Iran ease, reducing expectations for further increases. Economists expect euro zone inflation to slow to about 3% in June from 3.2% in May.

Some forecasters now expect the ECB to hold rates, while markets still price another quarter point increase.

Lagarde gave no signal about the timing of the next move. She said the ECB would continue responding to incoming data rather than committing to a fixed path.