In a joint interview with four European newspapers, ECB President Christine Lagarde dismissed the notion that last week’s quarter-point rate cut would be the start of a series of similar moves. Lagarde made it clear that “interest rates will not necessarily move downward in a straightforward manner.”
“We are not following a pre-determined path,” she explained, noting that “there could be periods where we leave interest rates unchanged.”
When asked if rates could remain unchanged for multiple meetings, Lagarde said, “It’s possible. We need to observe how labor costs evolve and ensure that earnings continue to absorb the recent increases.”
Lagarde emphasized ECB’s ongoing efforts to control inflation, stating, “We are still in tightening territory and will continue as long as necessary to bring inflation back to 2 percent.”
