ECB: Lagarde Announces Further Rate Cuts

Central Bank President Christine Lagarde is acting in defiance for the first time and announces further easing of monetary policy in the near future. “If the data continue to support the baseline scenario, the direction is clear, and we expect further interest rate cuts,” Lagarde explained in Vilnius, where the tenth anniversary of Lithuania’s accession to the euro is being celebrated.

On December 12, the ECB decided on its fourth consecutive rate cut, and Lagarde now explains that the restrictive orientation, followed by the institution until this day, no longer coincides with the development of the macroeconomic scenario. Lagarde explained that domestic inflation is still above the desired, but 97% of this fact can be attributed to services, which “still capture the revaluation events that occurred earlier this year, keeping services inflation at around 4%.”

Lagarde specified that the global trajectory of inflation, shocks, and associated risks suggest that inflation is under control.

According to some analysts, the latest rate cut and subsequent announcements of further monetary easing mark a decisive shift in ECB policy toward “proactive leadership.” The Frankfurt-based institution indicates what it will do in the future, thus enabling the financial system to move with greater safety and confirming that there will be support for the European economy, which is in an unfavorable situation.