(Technical repetition)
PARIS (Reuters) – European Central Bank (ECB) policy is working as expected, but inflation is not yet under control and it is premature to talk about cutting interest rates, policymakers agreed from their Jan. 24-25 meeting, according to meeting minutes released Thursday.
The ECB had left its key rate unchanged during this meeting and its president, Christine Lagarde, had ruled out the prospects of a reduction in interest rates, arguing that pressures on prices remained significant and that any discussion on an easing of monetary policy was premature.
“For the first time in many meetings, the risks to the achievement of the inflation target were considered balanced overall, or, at least, in the process of being balanced,” the minutes said Of the reunion.
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“Overall, members of the Governing Council indicated that continuity, caution and patience were still necessary,” the ECB said. “There was broad consensus among participants that it was premature to discuss a rate cut at this meeting.”
Money market expectations have been a roller coaster ride, with operators betting on up to 150 basis points of rate cuts in 2024, as early as March.
From now on, the markets expect a 96 bp decline, starting in June.
“Governing Council members indicated that continuity, caution and patience were still necessary, as the disinflation process remains fragile and easing too early could reverse some of the progress made,” the ECB added.
(Written by Balazs Koranyi, French version Corentin Chappron, edited by Blandine Hénault and Kate Entringer)
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