Christine Lagarde says the ECB needs to be ‘more confident’ about inflation to cut interest rates

European Central Bank (ECB) President Christine Lagarde said this Friday that the Governing Council “needs to be more confident” about slowing inflation in order to lower interest rates, despite “encouraging figures” on wages.

“The payroll performance in the fourth quarter is obviously encouraging. But as we said in our monetary policy statement, the Governing Council needs to be more confident that the slowdown in inflation we are seeing will be sustained and take us towards the medium-term level of 2%. There are many sectors and workers that are covered by the negotiations, which will conclude in the first quarter of 2024, and I think that these numbers, especially if they continue to be encouraging, will be important for us to evaluate further actions. forward to build trust,” said Christine Lagarde.

Lagarde was speaking to the press at the end of an informal meeting of eurozone (Eurogroup) finance ministers, which this Friday also included European Union (EU) leaders and central bank governors, on the day that the man responsible for Portugal’s finances, Fernando Medina, said that ” The longer” the ECB continues high interest rates, “the greater the risks” of a “deterioration in the economic situation”, given the context of falling inflation.

“The ECB and the entire euro system depend on data, and we will analyze various data other than wages, such as profit units, expectations, results of business telephone surveys, bank loan servicing and many other data that are important to us,” the president emphasized central bank of the single currency.

Asked about the actions of the North American Federal Reserve, which has already warned of the risks of cutting interest rates too early, Christine Lagarde emphasized “the fact that the ECB is independent.”

“And we are committed to continuing to rely on data and to be independent in our assessments and policy decisions,” he added.

At its January meeting, members of the Board of Governors unanimously approved the decision to leave interest rates unchanged and found broad consensus that it was premature to discuss possible cuts.

At a press conference, Eurogroup President Pascal Donohoe was asked about an idea proposed by French Economy and Finance Minister Bruno Le Maire for a voluntary capital markets union to prevent Europe from falling behind in the face of the economic crisis. powers such as China or the US, given the inability of the 27 EU countries to move forward.

On this issue, regarding steps to create a single capital market in all EU member states to unlock funding, Paschal Donohoe said he “agrees with Bruno”. [Le Maire] regarding the political urgency of achieving progress in this area.”

“I think this is a very big piece of the puzzle that we need to put into practice about how Europe can find the investment it needs to maintain its place in the world. I will be discussing specific issues separately in the coming weeks. […] and I will see if we can reach agreement on further steps on these issues,” said the Eurogroup President.

This informal Eurogroup meeting is now followed by Ecofin, focusing on the EU’s competitiveness vis-à-vis powers such as the US or China, while former ECB President Mario Draghi, who will be present at the meeting, prepares a report.