Interest rate cut message from the European Central Bank – Last Minute Economic News

Lagarde spoke at the press conference held in Frankfurt after the ECB Governing Council kept the 3 main policy rates constant in line with market expectations at today’s meeting.

“The Governing Council has decided to leave the ECB’s three key interest rates unchanged.” Using the statement, Lagarde explained that inflation has continued to decline with the recent decline in food and goods prices.

Lagarde said, “The increases in interest rates we have made in the past continue to put pressure on demand. This helps to bring down inflation.” said.

Reminding that domestic price pressures are strong and service prices continue to keep inflation high, Lagarde said, “We are determined to ensure that inflation returns to our medium-term target of 2 percent on time.” he said.

Lagarde explained that ECB interest rates are at levels that will make a significant contribution to the ongoing inflation fight process.

“If our updated assessment of the inflation outlook, the main dynamics of inflation and the strength of monetary policy transmission further increase our confidence that inflation is sustainably moving closer to the target, it would be appropriate to reduce the current level of monetary policy constraints.” Lagarde stated that they will continue to follow a data-based approach to determine the appropriate level and duration of the restriction and that they will not commit to a specific rate in advance.

Lagarde reminded that there was a decline in the general level of inflation, but inflation in service prices remained high at 4 percent in March.

“Inflation is expected to fluctuate at current levels in the coming months and fall to our target next year.” Lagarde said that the risks to economic growth are also downward.

Lagarde pointed out that growth could be lower if the effects of monetary policy are stronger than expected.

Explaining that they obtained some information and data in April and discussed them at the meeting, Lagarde explained that much more data and information will come in June and that they will make a decision with a new projection in this direction.

Lagarde stated that in June, they will check whether all data confirm the expectation that inflation will return to the target permanently, and if their confidence increases, they will make the appropriate decision.

Stating that a few members already felt confident about the interest rate decision at today’s meeting, Lagarde said that the majority of the members could reach a consensus on this issue when more data comes in June.

Reminding that service inflation in the Eurozone has been at high levels of 4 percent for the last 5 months, Lagarde said, “We will not wait for everything to return to 2 percent to make the necessary decisions.” he said

Stating that they want inflation to return to the target of 2 percent in a sustainable manner, Lagarde stated that it is inevitable that some elements of inflation will be higher than this level.

“WE DEPEND ON DATA, NOT THE FED”

Lagarde: “We are dependent on data, not the US Federal Reserve (FED).” made his assessment.

At the ECB’s monetary policy meeting held today, the refinancing rate was kept constant at 4.50 percent, the deposit rate at 4 percent and the marginal funding rate at 4.75 percent.

Thus, at the third meeting of the year regarding monetary policy, the 3 main policy rates were kept constant for the fifth consecutive time, while interest rates continued to remain at the highest level in the history of the euro.

The ECB increased interest rates by a total of 450 basis points in 10 consecutive meetings after July 2022.

The ECB, which continued to increase interest rates last year, did not make any changes in the meetings held after increasing the refinancing rate to 4.50 percent at its meeting in September 2023.

Markets predict that the ECB may start reducing interest rates at its June meeting.