Lagarde hints at a turnaround in interest rates in June

Lagarde hints at a turnaround in interest rates in June
ECB President Christine Lagarde

In addition to important data on wage developments, new economic forecasts from the central bank economists would also be available, Lagarde said on Wednesday in Frankfurt at the conference “The ECB and its Watchers”. “Then it will become clear whether the inflation path we expected in March will continue to hold,” she said.

  • also read: Economist expects interest rates to fall from June

In addition, the European Central Bank (ECB) will have a longer window to assess whether inflation data is broadly in line with projections. If all of these factors are aligned, “we can enter the phase of our monetary policy cycle in which we make the measures less restrictive,” said Lagarde.

No specific interest rate path

According to the ECB boss, how the interest rate cut will then be designed depends on the economic data. Decisions will continue to depend on the data situation and will be made from meeting to meeting, she explained. “This means that even after the first rate cut, we cannot commit to a particular interest rate path in advance,” she said.

The inflation rate in the 20-country community last fell to 2.6 percent in February after 2.8 percent in January. The ECB is aiming for 2.0 percent inflation. The deposit rate, which sets the trend in the financial market and which financial institutions receive from the central bank for hoarding excess funds, has been 4.00 percent since September 2023. The key interest rate at which banks can obtain fresh money from the ECB is still 4.5 percent. The next ECB interest rate meeting is planned for April 11th in Frankfurt, the following one on June 6th also in the Main metropolis.

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