Frankfurt believes rates are still constricting economic activity despite a series of cuts in 2024
ECB president Christine Lagarde told reporters on Monday that the direction of travel for rates is clearly “downward” and that last week's cut “is not the last interest-rate cut that we’ll do." Photographer: Liesa Johannssen/BloombergThe European Central Bank will lower interest rates further, with risks to the inflation outlook now “two-sided,” president Christine Lagarde said.
“What we see now is a change of risk position,” Ms Lagarde said Monday. “Whereas up until now, our inflation projection was associated with upside risk – so we feel that inflation could actually pan out to be higher than our projections – we believe now that the risks are two-sided, which is different from balanced.”Most officials say policy can gradually move to a neutral setting that neither restricts nor stimulates growth.
The backdrop to the debate is that the euro-area economy is struggling to gather momentum, with households and companies hesitant to spend money amid elevated uncertainty.
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