(Reuters) – European Central Bank (ECB) President Christine Lagarde said the euro zone was getting “very close” to meeting the central bank’s medium-term inflation target, according to an interview published by the Financial Times on Monday.
In early December, Lagarde had said the central bank would cut interest rates further if inflation continued to decline towards its 2% target, as curbing growth was no longer necessary.
“We are getting very close to that stage where we can declare that we have brought inflation sustainably to our 2% in the medium term,” Lagarde told the Financial Times, urging continued monitoring of services inflation.
“You know, inflation, the latest reading we have is 2.2%,” he added. “But services are still at 3.9% and not changing much. It’s been hovering around 4%. Now it’s declining slightly.”
Lagarde said she opposes Europe’s retaliation to tariff threats made by incoming US President Donald Trump.
“I said retaliation was a bad approach because I think blanket trade restrictions followed by retaliation and this confrontational, tit-for-tat way of approaching trade is just bad for the global economy as a whole,” he added.
Like Lagarde, Irish central bank chief Gabriel Makhlouf also warned that some elements of services inflation in the euro zone were a bit worrying, the paper said.
However, uncertainty clouded the outlook for 2025 as Trump’s actions were almost impossible to read, Makhlouf, a member of the ECB’s governing council, said separately.
Makhlouf would still want gradual interest rate cuts, rather than big jumps, unless the facts and evidence changed, he said.
“I have not seen, and at the moment I do not see, the need for a sudden big jump,” he said, referring to calls for the central bank to start cutting rates by 50 basis points.
“We don’t want to complicate our goal of price stability by making these kinds of insurance cuts.”
(Reporting by Bipasha Dey and Shubham Kalia in Bengaluru; Editing by Edmund Klamann and Clarence Fernandez)
