“Whatever happens, happens.” Christine Lagarde took refuge in an allusion to the title of the popular song performed by Doris Day to avoid giving any clues about her next moves in terms of interest rates after the quarter-point cut in the deposit facility decided on Thursday. In any case, the president of the European Central Bank (ECB) ruled out the possibility of a further cut at the next meeting on October 17, insisting that domestic inflation data are unsatisfactory.
At the press conference following the Government Council, Lagarde indicated that The rate cut was unanimously approved (unlike in June, when the Austrian representative voted against), although he admits that there are disagreements among members about the prospects for a recovery in consumption and growth in the eurozone in the coming months. “Some are more optimistic, others more pessimistic,” he noted.
“We considered that, taking into account the progressive process of disinflation, It was perfectly appropriate to moderate the degree of restriction monetary policy, by lowering the deposit facility rate by 25 basis points,” said the ECB president. Her new forecasts confirm (for the fifth time in a row) that inflation will return to the 2% target by the end of 2025, which reinforces the “confidence” of central bankers.
[El BCE recorta 25 puntos básicos los tipos de interés y efectúa un ajuste técnico para reducir la volatilidad]
There is, however, one indicator whose development particularly worries Lagarde: domestic inflation. “It’s not satisfactory, it’s resistant, it’s persistent”. That is why we must be resilient in our approach and remain very attentive to all underlying inflation indicators,” the President explained.
Therefore, as regards future rate decisions, the ECB will continue to “rely on data, which is particularly justified given the abundance of uncertainties”. “We will take decisions on a meeting-by-meeting basis. Our future path of (types), including the downward direction is obviousis not predetermined either in terms of sequencing or in terms of volume,” he insisted.
In any case, Lagarde wanted to emphasize that ECB will not just look at September CPI datawhich, according to what has been announced, will mark a drop in prices due to the “energy base effect”. “Relying on data does not mean focusing on a single figure, but on a battery of indicators,” he stressed. The price level will rise again in the last three months of the year.
First meeting with Escrivá
This Thursday the first meeting in Frankfurt was held with the participation of the new governor of the Bank of Spain, Jose Luis Escriváwhose jump to the monetary authority of the government of Pedro Sanchezhas drawn strong criticism from the opposition. Lagarde did not address the controversy and explained that the rest of her colleagues on the Government Council had welcomed her into the “circle of governors.”
“We congratulated him and welcomed him into the circle of governors. Like other governors, he has made very useful contributions. And I hope that, like any other governor, he will continue not only to contribute his personal opinions that might be inspired by the Spanish situation, but also have a dimension that other governors also have when they sit at the table of the Board of Governors. It is a process and a journey that I hope will be satisfactory both for him and for the group of governors,” said the president.
