At its board meeting on the 11th, the European Central Bank (ECB) left its main policy interest rate unchanged as expected, but hinted at the possibility of a rate cut soon. Photographed in December 2023 (2024 Reuters/Kai Pfaffenbach)
(Reuters) – The European Central Bank (ECB) left its main policy interest rate unchanged as expected at its Governing Council meeting on the 11th, but hinted at the possibility of a rate cut soon.
President Lagarde’s statement at the press conference after the board meeting is as follows.
The trajectory of inflation is uneven. However, the goal will be achieved by mid-2025. The inflation rate will return to its target of 2% between now and mid-2025, but it may rise or fall along the way. Much of this is related to the base effect caused by two large fluctuations in energy prices in 2023.
Overall data matters. There will always be rises and falls. It’s not linear.
We will not wait until inflation returns to 2% in all sectors to make the necessary decisions.
No conclusion can be drawn based on the assumption that the price situation in the United States and the euro area are the same. Not the same. The US and Eurozone economies are different.
In fact, several directors were reasonably confident that inflation was returning to target based on some data available in April. However, that was just a few people. Several of them agreed with the overwhelming majority that more data is needed in June to strengthen confidence.
The size of the ECB’s balance sheet has already shrunk considerably, and that process is ongoing. There is no further discussion.
The ECB does not commit to a specific interest rate path in advance.
We rely on data. We will be looking at all information, all indicators and forecasts for the entire euro area.
Risks to economic growth remain on the downside. If monetary policy becomes more effective than expected, the growth rate may decline.
Most underlying inflation indicators fell further in February, confirming that upward pressure on prices is gradually easing.
Inflation is expected to remain around current levels in the coming months and fall to the target level next year.
Tightness in the labor market continues to gradually ease.
According to the survey, a gradual recovery is expected throughout this year, led by the service industry.
The economy remained weak in the first quarter. Spending on services is strong, but manufacturing faces weak demand.
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2024-04-11 15:30:24
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