Although he reiterated that monetary policy and economy are “in good shape” by the President of the European Central Bank (ECB), Christine Lagardestated that he cannot announce the end of interest rates.
As uncertainty has been “significantly reduced” after the US trade agreement, European Central Bank (ECB) president Christine Lagarde described the risks to economic expansion as more balanced and those in inflation as “quite balanced”, according to Bloomberg.
Asked by CNBC If the monetary relaxation is over, Lagarde replied “I would never say that because I believe that a central banker’s job never ends”.
Lagarde and her colleagues have repeatedly stated that they are satisfied with the current framework of monetary policy. Policy -executives are confident that interest rates are suitable for achieving 2%inflation, even as the eurozone economy is struggling at the expense of higher US and renewed political turmoil in France.
Investors and analysts estimate that the cuts in borrowing costs are over, after eight reductions within one year that brought the ECB’s deposit rate to 2%. However, some officials do not want to be completely excluded from further reductions, with forecasts suggesting that the weak growth will contribute to the depreciation of inflation in the coming years.
“We are able to react to all the possibility”Lagarde told CNBC in an interview in Washington, where she participates in the annual IMF meetings. “Because, while we are in this good condition, things can happen”.
Increased uncertainty and higher duties are responsible for Europe’s gloomy prospects, according to the IMF. The IMF published new forecasts on Tuesday, which envisages an increase in gross domestic product by 1.2% this year – a little better than previously observed – and 1.1% in 2026 – slightly worse.
The data are largely aligned with the ECB’s own forecasts, which will be updated later in December. It is then that the debate can be intensified about yet another interest rates.
“So far we have fed inflation”, Lagarde said. “We are in good shape. But we have to predict anything that happens ยป.