ECB’s Lagarde: Discussion of Rate Cut Would Be Totally Premature

26 October 2023

By Isabel Teles – ATHENS (Econostream) – European Central Bank President Christine Lagarde on Thursday said that the time had not come to start considering rate cuts.

At the press conference following the Governing Council’s monetary policy meeting, Lagarde said that the matter of when and at what level to cut rates ‘was not discussed at all.’  

‘The discussion of cut is totally, totally premature’, she said. ‘For the moment, we are saying that we have to be steady, we have to hold. This is the decision of today: we are holding.’

The Governing Council’s decision was unanimous and based on a ‘general, well-shared assessment of the current situation’ after the ten consecutive hikes already taken, she said.

‘Sometimes, inaction is action’, she said. ‘And a decision to hold is actually meaningful and was taken by total agreement of all governors and members of the Governing Council this morning.’

However, she did not rule out the possibility of new hikes to bring inflation to target, given the ECB's commitment to data-dependence.

‘The best tools that we can use to return inflation to 2% are our interest rates’, she said. ‘And this is what we are using, and I just want to mention that the fact that we are holding does not mean to say that we will never hike again.’