ECB’s Lagarde: ‘I’m Really Confident That We Have Inflation Under Control’

22 May 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Tuesday said that she was confident about reaching price stability, as some of the factors that had impacted inflation were fading away and the forecasts were close to the ECB’s target.

In an interview with Irish national television and radio broadcaster RTÉ, Lagarde said, ‘I’m really confident that we have inflation under control’, adding, ‘And the forecast that we have for next year and the year after that is really getting very very close to target, if not at target. So I’m confident that we’ve gone to a control phase.’

‘[S]ome of the factors that had a big impact [on inflation] are fading away, I’m thinking about the energy crisis, the supply-chain bottlenecks – that is gradually moving away’, she noted.

There was no commitment to an interest rate cut in June, she said, but rather a ‘strong likelihood’, provided that the ‘data that we receive reinforce the confidence level that we have that will deliver the 2% in the medium-term.’

After a first interest rate cut, the three big areas that would determine the future rate path would be global uncertainties, wages and profits, she said.

Some economic stagnation was a consequence of the monetary policy necessary to control inflation, but the resilient labour market had been a surprise, she said.

‘I’m not suggesting that we have the best of all worlds, but it’s a good equilibrium as we have it at the moment, and I hope it stays to that target of 2%’, she said.

Asked about the impact of the United States Federal Reserve’s monetary policy decisions, Lagarde said that she monitored the Fed as it had ‘an impact on financial conditions around the world’, but that she also paid attention to other central banks, such as the Bank of England, the Bank of Japan and the People's Bank of China.

The ECB should be prepared for the consequences of a Trump election, she said.

‘Whether it is through tariffs or through other ways and means, we just need to get ready because we are strong, we are a big economic zone, and we shouldn’t be followers, we should be leaders’, she said.