ECB’s Lagarde: Last Week’s Rate Cut Not the Last; Inflation Risks Now Two-Sided
16 December 2024

By David Barwick – VILNIUS (Econostream) - European Central Bank President Christine Lagarde on Monday said that the rate cut decided by the ECB Governing Council last week would not be the last in a context in which the risks to inflation had changed for the better.
Speaking to journalists before a conference in the Lithuanian capital, Lagarde said, ‘I said during the press conference that the direction of travel is clear and it is downward.’
‘So, this is not the last interest rate cut that we are doing’, she continued. Hopefully it would be properly transmitted, she said.
The ECB’s price stability target called for 2% on a sustainable basis in the medium term, she reminded. ‘And every word matters: sustainable, medium term. What we see now is certainly a change in the risk positions. Whereas up to now our inflation projection was associated with upside risk … we believe now that the risks are two-sided, which is different from balanced.’
There were still both upside and downside risks, she said. The upside risks included wages and profits as well as US trade policy, she said.
Asked about a common fiscal policy, she responded, ‘What I can tell you is that the Governing Council, the entire Governing Council … has adopted a view concerning consolidated approach, which actually expects and hopes for a significant fiscal common pot, for lack of a better word - a fiscal availability that would be common to all European countries, and certainly the intention in that respect is to act for the common good of Europe.’
The common good starts with security, she added.