ECB’s Lagarde: Inflation ‘Not Quite’ Defeated Yet

24 September 2024

By Marta Vilar – MADRID (Econostream) – European Central Bank President Christine Lagarde said on Tuesday that despite inflation being almost at the 2% target, it was not quite defeated yet.

In an interview on American late-night talk and satirical news TV programme The Daily Show, Lagarde observed that ‘[W]e are getting there, we are almost at target, […] I want to make sure that we are at 2% and we stay at 2% because that’s regarded as stable inflation. And we look at that in the medium term, so we don’t want to have one month at 2% and another month at 2.6%’.

Lagarde said the ECB talked to the Federal Reserve, which cut interest rates by 50bp in its September meeting, but that they did not coordinate.

Asked about a soft landing, she confirmed better stability could be achieved in the medium term.

‘Tools have improved, the analytical models are better and because we have learnt in a few years more than we have in decades. And we know uncertainty is going to be with us and we have to factor that in, and we need to make sure that we have tools to anticipate uncertainty’, she said.

On the other hand, a stimulus like QE must be ‘reasonable and sensible, you don’t want to overdo it to a point where you then have to withdraw and sponge the liquidities that are out there’.

That’s the reason why at some stage central banks must stop QE and governments should stop fiscal stimulus if the economy is getting better, she said.