ECB shouldn't overreact to temporary inflation spike, Lagarde says

• "The key challenge is to ensure that we do not overreact to transitory supply shocks that have no bearing on the medium term," European Central Bank President Christine Lagarde said Tuesday.
• Lagard said she sees no sign that a recent spike in prices was becoming "broad-based" across the euro zone economy.

Christine Lagarde, president of the ECB, speaks at the Bank's press conference in Frankfurt, Germany.

Boris Roessler | picture alliance | Getty Images

European Central Bank President Christine Lagarde continued play down inflation worries on Tuesday and warned against overreacting to a temporary spike in prices.

"The key challenge is to ensure that we do not overreact to transitory supply shocks that have no bearing on the medium term, while also nurturing the positive demand forces that could durably lift inflation towards our 2% inflation target," she told an ECB conference.

"We will only react to improvements in headline inflation that we are confident are durable and reflected in underlying inflation dynamics," she said.

"We see no signs that this increase in inflation is becoming broad-based across the economy."