Ecb president Lagarde expresses concerns over potential economic expansion
After the European Central Bank (ECB) announced reduced interest rates, President Christine Lagarde didn't spill the beans about further plans. She's keeping her options open in light of projected rising inflation and potential growth hazards.
As per the ECB's council, the chance of subpar growth endures. At a post-meeting press conference, Lagarde stated, "We're still seeing downside risks to growth." The ECB had earlier somewhat adjusted its growth forecasts for 2024 and 2025.
Lagarde predicts an improvement in recovery trends over time. By the year's end, she suggests inflation might increase, but it might decrease in the second half of the following year.
The ECB's council previously made a 0.25% reduction in its deposit rate, bringing it down to 3.5%. They didn't have any future interest rate declarations, instead stressing that monetary policy moves based on data and is decided upon meeting by meeting. The council aims for a rigid monetary policy to reach the 2% inflation target in a timely manner.
Lagarde mentioned that all ECB members agreed on the interest rate cut. She also kept mute on future monetary policy plans and potential imminent interest rate reductions. "Decisions are made meeting by meeting." They aren't bound by a schedule on either timing or the size of the next interest rate adjustment.
No predictions about Commerzbank and UniCredit merger
Lagarde chose to keep calm about the potential acquisition of Commerzbank by UniCredit. "We usually don't comment on individual institutions." A few hoped for cross-border mergers. "It'll be fascinating to observe how this scenario unfolds over the next few weeks." There's a clear procedure if shareholding thresholds are surpassed involving the Eurozone banking supervisor SSM, who must grant approval. This is done independently, as per Lagarde.
In response to the Eurozone banking supervisor SSM's required approval process for surpassing shareholding thresholds, Lagarde stated, "The SSM's approval is crucial in the potential Commerzbank-UniCredit merger scenario." Regarding further interest rate decisions, Lagarde continued, "Moving forward, we'll make interest rate decisions meeting by meeting, based on the most recent data."
