ECB’s Lagarde: “We are well advanced on the path to disinflation”

The president of the European Central Bank (ECB), Christine Lagarde, said on Tuesday that the eurozone is “very advanced“on the path to disinflation but warned that there is still much uncertainty about the future.

“We are well advanced on the path of disinflation and we are in a kind of slow recovery that came in the first quarter and we hope it will persevere, but there is uncertainty and big questions about the future.“, he said during the monetary policy panel at the annual forum held by the ECB in Sintra (Portugal).

Lagarde, in a panel with the president of the US Federal Reserve (Fed), Jerome Powell, and the president of the Central Bank of Brazil, Roberto Campos Neto, said that the inflation data in the eurozone, which slowed to 2.5% in June, is positive, but the path will be “hilly” until the end of 2024.

He ECB The Eurozone maintains its forecast that the eurozone will reach the 2% inflation target by the end of 2025, and its president dared to anticipate that, in a year’s time, the indicator will be only a few tenths of a percentage point above the target.

However, he did not want to advance the future steps he will take in his monetary policy, after lowering rates in June for the first time since 2016: “We need to look under the skin of the economy and see where it is headed and assess what our reaction function is and how we should decide.“, he explained simply.

The person in charge of the ECB He said that the policy followed until now “It was not a linear process or a predetermined path,” and insisted that the next steps will be based on more research and more data.

He also pointed out that it is not necessary for inflation in the services sector to fall to 2% because the rise in prices of manufactured products is below that figure and, therefore, in the end there will be a “balance”.

As he already argued in his introductory speech at the forum on Monday, the “soft landing” of the economy is not guaranteed.

Asked about the impact of the elections in France and the United Kingdom on the eurozone, Lagarde He declined to comment on the political situation.

“But obviously the ECB has to do what it has to do. Our mandate is price stability, which depends on financial stability. We are vigilant because it is part of our job and we will continue to do so.“, said.

The forum of the ECB Every year, the Fed brings together central bank governors, academics and representatives of the financial sector in Sintra to discuss monetary policy, similar to what the US Fed has been doing since 1978 in Jackson Hole.

This year’s edition, which started on Monday and will run until Wednesday, will address topics such as the past, present and future of inflation, geopolitical shocks and rising prices, monetary policy cycles and productivity in the Eurozone.