ECB not in a hurry to cut rates further, Lagarde says2 Jul 2024 05:41
SINTRA, Portugal (Reuters) - The European Central Bank needs more time to conclude that inflation is firmly on a path to 2% and benign economic developments indicate that rate cuts are not urgent, ECB President Christine Lagarde said on Monday.
The ECB lowered rates for the first time in June after its most aggressive rate hike spree on record, but held back on committing to any subsequent moves, arguing that the outlook was far too uncertain to telegraph a second cut.
"It will take time for us to gather sufficient data to be certain that the risks of above-target inflation have passed," Lagarde told the ECB Forum on Central Banking, the bank's hallmark policy conference.
"The strong labour market means that we can take time to gather new information," she added.
The ECB is trying to walk a narrow path, reconciling inflation uncertainty and weak growth. Uncertainty would warrant caution in cutting rates, but persistent economic weakness strengthens the case for easing, tugging the ECB in opposing directions.
Lagarde acknowledged this dilemma, warning that it was still not a given that the bloc would avoid a recession, despite a modest growth uptick last quarter.
"A 'soft landing' is still not guaranteed," she said. "We also need to be mindful of the fact that the growth outlook remains uncertain."
Growth indicators in recent weeks have come in on the weaker side of expectations, challenging a widely held view that a year and a half of economic stagnation was over and a recovery was taking hold.
https://www.investing.com/news/economy-news/ecb-not-in-a-hurry-to-cut-rates-further-lagarde-says-3504237
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