Lagarde Says ECB May Hold Rates Steady For More Than One Meeting

Eurozone interest rates are likely to remain unchanged for sometime as the European Central Bank President Christine Lagarde said restrictive policy has not ended and the bank may wait several meetings before easing rates again.

Interest rates may not follow a linear downward path, Lagarde said in Paris in a joint interview to several European newspapers including Les Echos, Expansion, Il Sole 24 Ore and Handelsblatt.

The central bank lowered interest rates by 25 basis points last Thursday, taking the refi rate to 4.25 percent. That was the first reduction since 2019 and a rare occasion when the euro area central bank cut rates ahead of the US Federal Reserve.

The ECB Chief observed that the rate cut decision was “appropriate” and that it was not the first time that both central banks took divergent paths in policy-making.

The ECB’s decisions will be data dependent, Lagarde reiterated.

The central banker also said that the lack of forward guidance on interest rates was not a sign of a deep divide in the Governing Council, but it only reflected policymakers’ conviction that forward guidance on rates was not useful at this juncture due to significant uncertainty.

Lagarde said last week that the Governing Council was unanimous in taking the latest decision, except for one policymaker.

Economists expect one more ECB rate cut this year.

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