Eurozone inflation is still "too high" and the European Central Bank will keep hiking interest rates but at a more gradual pace, president Christine Lagarde said Thursday.

"We are getting a bit closer to our cruising altitude, not there yet, and that means that we need to continue climbing, but not as rapidly," Lagarde told a banking conference in Hanover. Eurozone inflation fell sharply to 6.1 percent in May, new data showed Thursday, on the back of cooling energy prices. But the figure remains well above the ECB's two-percent target.

"Inflation is still too high," Lagarde said. Moving "at our fastest pace ever", Lagarde said, the ECB has lifted interest rates by 3.75 percentage points since last July.
"There is no clear evidence that underlying inflation has peaked," Lagarde warned, referring to a measure of inflation that strips out volatile food and energy prices.

The ECB will unveil its next monetary policy decision on June 15, with observers pencilling in a rate hike of 25 basis points.