Lagarde says ECB has hit inflation goal but uncertainty remains

[FRANKFURT] The European Central Bank (ECB) has achieved its goal of taming prices but uncertainty persists over the outlook despite the trade deal with the US, president Christine Lagarde said.

“Interest rates have to target an inflation level, which we do target, and which we have now reached,” Lagarde told Danish broadcaster DRTV in an interview aired on Saturday (Sep 20).

How the situation will play out from here has become more predictable after the European Union and the US agreed on higher tariffs. But things aren’t as clear as they were before US President Donald Trump began imposing his trade levies. 

“The level of uncertainty has reduced by about 50 per cent and that’s a significant improvement from where we were,” Lagarde said. But “we still have uncertainty around and everybody has to deal with it.”

The ECB kept borrowing costs on hold last week for a second meeting after eight quarter-point reductions within a year. Policymakers expect inflation to settle around the 2 per cent goal after a temporary undershoot next year and the economy to gain momentum in the coming quarters.

Several officials say they don’t see a need for further easing as long as there is no major shock to the economy. Some, though, have suggested more steps should not be excluded. BLOOMBERG