ECB Cuts Interest Rates, Lagarde Emphasizes Data-Dependent Approach
LJUBLJANA — In a significant move, the European Central Bank (ECB) has announced a reduction in its key interest rates by 25 basis points, reflecting a strategic response to ongoing economic conditions. During a press conference in Slovenia, ECB President Christine Lagarde detailed the decision, highlighting the successful progression of the disinflationary process within the eurozone.
Lagarde explained that the Governing Council’s decision was informed by recent data indicating that while inflation is expected to rise in the short term, it is projected to decline to the ECB’s target of 2% by next year. “We are determined to ensure that inflation returns to our medium-term target in a timely manner,” she stated.
The ECB President emphasized that the council will maintain sufficiently restrictive policy rates for as long as necessary to achieve this goal. “We are not pre-committing to a particular rate path,” Lagarde added, underscoring a commitment to a flexible, data-dependent strategy for future interest rate decisions. These decisions will consider various factors, including the inflation outlook and the strength of monetary policy transmission.
This meeting in Slovenia is part of the ECB’s initiative to occasionally hold sessions outside of its Frankfurt headquarters, reinforcing its commitment to transparency and engagement with the broader European community.
Positive Reception from European Lawmakers
Markus Ferber, a German Conservative Member of the European Parliament (MEP) and EPP Coordinator on the Economic and Monetary Affairs Committee (ECON), welcomed the rate cut. He described the decision as “the right choice at the right time,” noting that recent inflation data has been encouraging while economic growth remains sluggish.
Ferber cautioned that effective monetary policy requires precise timing, as it operates with a considerable time lag. “The ECB must anticipate developments, not just react to data,” he stated. He commended Lagarde for not repeating past mistakes and emphasized that while the rate cut is a necessary step, it is not a cure-all for the sluggish European economy.
“The sluggish economy needs a liquidity boost, but real growth will only return if EU governments focus on productivity and implement necessary reforms,” Ferber concluded.
The ECB’s decision to cut rates reflects ongoing efforts to stimulate the eurozone economy and restore growth while maintaining a careful watch on inflationary trends.
Source : Swifteradio.com
