ECB's rate hikes are only now starting to bite, Lagarde says

The European Central Bank's interest rate increases are just starting to take effect on the economy but their transmission may become stronger as a result of the banking turmoil, ECB President Christine Lagarde said on Wednesday.

"If, for example, banks start to apply a larger 'intermediation wedge' – meaning that at any level of the base rate they demand a higher compensation for the perceived risk they are taking on when lending – then pass-through will become stronger," Lagarde said.