ECB’s Lagarde: Selected Quotes From Press Encounter

14 June 2024

By David Barwick – DUBROVNIK, Croatia (Econostream) – Following are selected quotes from Friday’s press encounter with European Central Bank President Christine Lagarde on the margins of the Dubrovnik Economic Conference:

‘And we do have plenty of challenges. But I really believe that we are now heading towards a disinflationary path that will have its little hiccoughs here and there – what we call the bumps on the road – but that is definitely on a declining path. And we will be talking about all those issues. A lot has already been done today, a lot more this afternoon and tomorrow. And all key pockets will be firmly addressed. I will myself tonight talk about the very special circumstances of the shock that we are facing.’
‘We work on the basis of a target of 2%, which must be reached in the medium term and be sustainable. All the projections that we have examined since last September indicate that inflation will be at 2% in the last part of ’25. So that is next year, second half of ’25. We have had that projection over the last - September, December, March, June – this is where we are heading, and unless we have a major shock or unless we have downside risks that materialise in the next few months, this is the direction of travel and this is what we will look at as our target.’
On Croatia: ‘And it is true that in some countries, growth will be higher. That is certainly the case for Croatia, which has one of the highest growth rates for the euro area. And it also has a higher inflation rate than the average in the euro area. But the two often come together. And I’ve also noticed that your unemployment rate is lower than the euro area average, and your participation rate in the economy is also higher.’
On France: ‘I’m not going to comment on domestic political situations. I will simply say that it is the duty of the European Central Bank to deliver on its mandate and to keep inflation under control and back to target, and this is what we will be doing.’
On the U.S. Federal Reserve: ‘My suspicion is that, as indicated, that the signals, the measurements were not sufficient yet for them to have the level of confidence that we ourselves determined we had in the disinflationary path.’
On why the ECB cut rates: ‘I think I explained that during the press conference last week. We did so because we had enough confidence in the disinflationary path that the indicators, the measurements, the projections, the underlying inflation and the transmission of monetary policy conveyed to us that we were heading towards the target, as I mentioned to you.’
‘First of all, we only cut rates if the conditions are satisfied and if we have enough confidence that we have been sufficiently restrictive, that we continue being sufficiently restrictive, but, that we are, as a result, going to hit the target that we set for ourselves. Assuming all these conditions are satisfied and rates are cut, for people who take out mortgages, for corporates who want to invest and have to borrow, if the transmission works well, the rates all over will be lower.’