Lagarde, Christine

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    ECB Cuts Interest Rates Again as Eurozone Inflation Slows

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    Policymakers who set interest rates for the 20 countries that use the euro have lowered rates in back-to-back meetings for the first time since 2011.The European Central Bank cut interest rates on Thursday for the third time in about four months, as inflation in the eurozone has cooled faster than expected and economic growth has been sluggish.Policymakers who set interest rates for the 20 countries that use the euro lowered their key rate by a quarter point, to 3.25 percent. Thursday’s decision came just five weeks after a cut at the bank’s previous meeting, and on a day that a report showed the eurozone’s inflation rate slowing to 1.7 percent in September, falling below the bank’s 2 percent target for the first time in more than three years.“The disinflationary process is well on track,” Christine Lagarde, the president of the central bank, said at a news conference in Ljubljana, Slovenia.The rate move was also influenced by weaker-than-expected economic data in the past few weeks. Whether it was the inflation data or surveys of economic activity, “it is the same story,” she said: “It’s all heading in the same direction — downwards.”After years of trying to force inflation down with high interest rates, central bankers around the world are walking a tightrope as they consider how quickly to cut interest rates. Lowering rates too fast could reignite simmering inflationary pressures, but keeping rates too high for too long risks slowing the economy substantially and inflation becoming too weak.In recent weeks, policymakers have suggested that rate cuts could be more aggressive as inflation has slowed significantly and economic growth has been lackluster. Last month, the U.S. Federal Reserve cut rates by a half-point, paving the way for quicker or bigger rate cuts in Europe, analysts said. On Wednesday, traders increased their bets that the Bank of England would pick up the pace of its rate cuts after data showed inflation in Britain fell to 1.7 percent in September, below the bank’s 2 percent target.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      European Central Bank, Citing Wage Growth, Keeps Rates Steady

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      Although inflation has eased, the eurozone’s central bank said that “domestic price pressures remain high.” Rates remain the highest in the central bank’s history.The European Central Bank on Thursday held interest rates steady for a fourth consecutive meeting, even as policymakers noted the progress that has been made in their battle against high inflation.The deposit rate remained at 4 percent, the highest in the central bank’s two-and-a-half decade history. Officials are weighing how soon they can bring interest rates down.“Interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution,” to returning inflation to the bank’s 2 percent target in a timely manner, the central bank said in a statement. “The Governing Council’s future decisions will ensure that policy rates will be set at sufficiently restrictive levels for as long as necessary.”Last month, the annual rate of inflation in the eurozone slowed to 2.6 percent, edging closer to the central bank’s target. But policymakers at the bank, which sets interest rates for the 20 countries that use the euro, have been cautious about cutting rates too quickly and reinvigorating inflationary pressures. Economists have warned that the path to achieving the bank’s inflation target is likely to be bumpy.These concerns played out in the latest inflation report, where the headline rate for February came in higher than economists had expected and core inflation, a critical gauge of domestic price pressure that strips out energy and food prices, was also higher than forecast.Traders had been betting that interest rates would be cut in June, but started to dampen their expectations after the inflation data was released. Those rate-cut expectations are likely to be bolstered again, as the central bank lowered its inflation forecasts on Thursday. It now sees inflation averaging 2 percent, meeting its target, next year and then falling to 1.9 percent in 2026.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      When Will the European Central Bank Start Cutting Rates?

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      Interest rate cuts could start as soon as April, investors say. But the eurozone’s central bank, which held rates steady on Thursday, has said it will probably wait longer.If what goes up must come down, then the urgent question on the minds of many in Europe is when will interest rates begin dropping? For months, rates have been set at the highest in the European Central Bank’s history.Despite the protests of the eurozone’s policymakers, investors have been betting that the central bank will cut rates quite soon — possibly in April. Traders figure rates must come down because inflation has slowed notably — it’s been below 3 percent since October — and the region’s economy is weak. By the end of year, the central bank will have cut rates by more than 1 percentage point, or between five and six quarter-point cuts, trading in financial markets implied.Policymakers, however, are trying to pull market opinion in the other direction and delay the expectations of rate cuts. Many of the central bank’s Governing Council are wary of declaring victory over inflation too soon, lest it settle above the bank’s target of 2 percent.On Thursday, the European Central Bank stuck to this outlook. It held interest rates steady, leaving the deposit rate at 4 percent, where it has been since September. The bank said rates were at levels that, “maintained for a sufficiently long duration, will make a substantial contribution” toward returning inflation to 2 percent in a “timely manner.”Benchmark interest rate in the eurozoneEuropean Central Bank’s deposit facility rate.

      Source: European Central BankBy The New York TimesInflation in the eurozoneYear-over-year change in consumer prices in the eurozone.

      Source: EurostatBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More