Lagarde says no need for a tougher response to Middle East conflict, inflation will still return to the 2% target
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She stated that medium-term inflation is expected to fall back to 2%, that policy adjustments will continue to be made on a "meeting-by-meeting, data-dependent" basis, and that flexibility will be maintained to respond to external shocks. The market still expects there may be room for further interest rate hikes within the year.
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