Daily Management Review

Lagarde: ECB rate cuts may happen later than in 'a couple of quarters'


The European Central Bank will be able to begin decreasing interest rates in "a couple of quarters," according to ECB President Christine Lagarde at a Financial Times conference.

European Central Bank via flickr
European Central Bank via flickr
If present rates are maintained for a long enough period of time, she believes inflation in the eurozone will slow to the objective of 2%.

"That doesn't mean anything will change in the next couple of quarters," Lagarde clarified. - "Long enough means long enough."

Furthermore, she stated that price rises could yet escalate, particularly if big new energy supply difficulties arise.

"It cannot be assumed that overall inflation will remain at the current (lowest in more than two years) level of 2.9 per cent," the head of the European Central Bank said. According to her, the present reduction in inflation is related to decreasing energy prices and is unlikely to last.

In October, the ECB kept all three key interest rates steady. The base rate stayed at 4.5%, the deposit rate at 4%, and the marginal lending rate at 4.75 %. Previously, the central bank had hiked interest rates for ten consecutive meetings.

source: ft.com