Central Bank of Europe - The ECB President has lowered anticipation for additional interest rate decreases.
The leader of the European Central Bank (ECB), Christine Lagarde, defended the recent reduction in interest rates amidst criticisms and tempered expectations for more rate cuts. Although the central bank is optimistic about reaching its long-term inflation goal of 2% next year, Lagarde stated during an interview with "Handelsblatt" and other European financial papers that "the war is not over yet."
Just a week ago, the ECB implemented the first interest rate cut since the high levels of inflation in the currency region and decreased the main refinancing rate by 0.25 percentage points despite the strengthening wage growth. Lagarde admitted that "certain figures could have been more favorable." Nevertheless, she supported the change in interest rates as necessary.
However, this doesn't imply that "interest rates will instantly plummet." Lagarde painted a picture of an interest rate cycle with interruptions: "There might also be times when we leave the interest rates untouched."
Lagarde noted that the growth outlook for the eurozone has evolved for the better, considering recent economic data, improved sentiment indicators, and the still healthy labor market in the eurozone. Thus, she anticipates that the economy will "regain momentum" once again. Said the ECB head.
Read also:
The interest rate cut by the ECB, led by Christine Lagarde, has sparked discussions among central banks around Frankfurt am Main. According to Handelsblatt, Lagarde expects prices to remain stable despite the interest rate cuts. Some analysts suggest that further interest rate cuts could help boost economic growth across Europe. However, Lagarde warned that the economic situation remains complex, and the fight against inflation is not yet over for the ECB. The ECB's decision to cut interest rates was driven by the need to support the eurozone's economic recovery.
