Christine Lagarde, President of the European Central Bank (ECB), stated on the 16th (local time) that there are downside risks to inflation and indicated that the policy interest rate would be further lowered.
President Lagarde said at a conference held in Vilnius, Lithuania, "If incoming indicators continue to confirm our standards, the direction is clear, and we expect to lower interest rates further."
She added, "As past shocks disappear, inflation risks are also changing," and "Downside risks (to prices) stem from weaker-than-expected growth forecasts and increased uncertainty due to geopolitical events."
She also pointed out that the ECB's stance of 'keeping policy rates sufficiently restrictive' no longer reflects the changing macroeconomic and inflation risks. On the 12th, the ECB lowered the deposit rate from 3.25% to 3.00% per annum and removed the phrase used since the high inflation phase following the COVID-19 pandemic from its statement.
This year, the ECB has cut the deposit rate by 100 basis points (1bp = 0.01 percentage points) in four rounds. The market expects that the ECB may lower the policy rate by another 100bp in the first half of next year and possibly cut further in the second half.
Asset management firm Fidelity International forecasted that the ECB deposit rate could be lowered to 1.50% next year.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
