The European Central Bank’s interest rates are not on a linear trajectory and policymakers could sometimes wait more than one meeting before cutting them again, ECB President Christine Lagarde said in an interview to a newspaper.
Last week, the ECB cut interest rates from a record low, but stopped short of easing policy further, given stubbornly high wage growth and a further rise in wages. inflation forecasts.
“We have taken the appropriate decision, but that does not mean that interest rates are on a linear downward trajectory,” Lagarde said in a joint interview with several major European newspapers.
“There could be periods where we maintain rates again,” Lagarde said, according to Expansión, Handelsblatt, Il Sole 24 Ore and Les Échos.
Asked if this meant the ECB could hold rates for longer than just one meeting, she said “that’s a possibility.”
Markets now expect slightly more than one rate cut over the remaining four meetings this year and between 3 and 4 reductions through the end of 2025, or over the next 12 monetary policy meetings.
Although Lagarde did not explicitly say the ECB would keep interest rates at their current level in July, she argued that further cuts depended on a range of indicators relating to wages and corporate profits. , which are only available closer to the bank’s September meeting.
“We will need more data, including on wages, how unit profits are growing and absorbing some of labor costs, and productivity,” she said.
ECB board member Isabel Schnabel and Slovak policymaker Peter Kazimir both said the ECB was unlikely to make another rate cut next month, while many others expressed concern. speaking privately have made the same argument.
However, Ms Lagarde refrained from any explicit comments, given the uncertainty and likely shocks to the path of inflation.
“Forward guidance has not been helpful,” Ms. Lagarde said. “A time-based orientation is currently not useful. (Reporting by Balazs Koranyi; Editing by Kirsten Donovan)
