ECB’s Lagarde: All Information in Last Five Weeks Was Heading in Direction of a Cut

17 October 2024

By Marta Vilar – MADRID (Econostream) - European Central Bank President Christine Lagarde on Thursday said that every data set received since the last Governing Council meeting had pointed to lower inflation.

During the press conference following the meeting at which the Governing Council decided to cut the three key interest rates by 25bp, Lagarde said that ‘all the information we received in the last five weeks, since our last monetary policy decision, [was] heading in the same direction: lower’.

The decision to cut by 25bp was unanimous, she stated.

As for the chances of a similar move in December, Lagarde said she was not opening the door to any specific next move and repeated that the ECB would remain data-dependent and apply its meeting-by-meeting approach.

‘It is clear that between this meeting and the next meeting we have in December, we will be receiving more data, some of it soft, some of it hard, and more readings’, she said, ‘and it will help us decide’.

The ECB president stressed that there was no doubt that policy was still restrictive.

‘There is also no question on our mind that we are not yet at this ... 2% medium-term target in a timely manner, and this has to be sustainable’, she said.

Despite having flagged a low inflation number for September at the previous Governing Council meeting, Lagarde said that neither the ECB nor anyone else had anticipated HICP to fall to 1.7%.

Reaching this number ‘certainly raised our confidence that the disinflationary process is well on track’, she added.

Asked if the ECB had ‘broken the neck’ of inflation, she said that they were in the process of doing so, but that the neck was not ‘completely broken yet’.

Lagarde ruled out a potential recession in the euro area and said the ECB was still expecting a soft-landing scenario to materialise.

‘I would say we are concerned about growth to the extent that it has an impact on inflation’, she said.

On the recent movements in oil prices due to turmoil in the Middle East, the ECB was ‘very attentive to the price of oil’, she said.