ECB’s Lagarde: ‘Not Overly Concerned’ About Importing Inflation from US

22 January 2025

ECB’s Lagarde: ‘Not Overly Concerned’ About Importing Inflation from US
Christine Lagarde, president of the European Central Bank, at the ECB Forum on Central Banking in Sintra, Portugal on July 3, 2024. Photo by the ECB under CC BY-NC-ND 2.0.

By Marta Vilar – MADRID (Econostream) – European Central Bank President Christine Lagarde said on Wednesday that the ECB Governing Council was not very worried about importing inflation to Europe from the US due to US President Donald Trump’s policies.

In an interview with CNBC, Lagarde said that the ECB was ‘now confident that the target is in sight, that the disinflationary process continues, and we are not overly concerned by the sort of export of inflation to Europe.’

Lagarde indicated that she was not ‘really surprised’ by the fact that President Trump did not announce new tariffs against Europe on the first day of his term, but that it didn’t mean that tariffs wouldn’t eventually be implemented.

‘I think it will be a more selective, focused development that we will see in the next few days or weeks’, she said.

Europe should be prepared and should anticipate what will happen so as to prepare a response, she indicated.

‘[D]ialogue has to continue’, she said, ‘and the respective parties have to sit at the table and see what is their respective agenda, what strength there is on each side, what weaknesses there are.’

The ECB was seeing downside risks to growth, she argued, and would be looking ‘very carefully’ at services inflation, wages and other ‘latecomers’ in order to verify the expected decline in early 2025.

Asked about a potential 50bp cut at some point, Lagarde downplayed expectations of it happening anytime soon but reiterated that the ECB would do whatever it had to.

‘[W]ho cares about being jumbo, we want to get to target’, she said. ‘We’ll do what we have to do.’

Lagarde regarded positively the current gradual, data-dependent approach.

Some market observers would like the ECB to go back to forward guidance, she noted.

‘No’, she said. ‘We have a method, we will apply the method and we will take all the data as it comes in.’

The ECB had not anticipated yet the likely decline in energy prices, she acknowledged.

 

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