Lagarde says it’s likely ECB will cut interest rates in summer
THE European Central Bank probably has a consensus among officials that an interest-rate cut will arrive in the summer (June to Sept), according to President Christine Lagarde.
Speaking at Bloomberg House in Davos in an interview with Bloomberg Television, she said that policymakers are “on the right path” in their fight to tame consumer prices, and that it’s their role to say what is likely to happen.
“I would say it’s likely too,” Lagarde said. “But I have to be reserved, because we are also saying that we are data dependent, and that there is still a level of uncertainty and some indicators that are not anchored at the level where we would like to see them.”
Just a day before the start of the so-called quiet period that precedes ECB monetary-policy meetings, the president is joining many of her colleagues in seeking to damp expectations of imminent loosening, while acknowledging that officials are on a path to ultimately lower borrowing costs.”
“You’ve talked to some of them, they have spoken recently, and each of them has their view, which I respect completely,” Lagarde said. “We generally coalesce towards the decisions that we make on the basis of data. Some of them have their local domestic data, they have their respective inflation rates, which are different from one country to the other.”
While the president recognised how consensus is forming, she also said that market bets on aggressive rate cuts are a distraction.
“It is not helping our fight against inflation, if the anticipation is such that they are way too high compared with what’s likely to happen,” Lagarde said. BLOOMBERG
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