FRANKFURT (Reuters) – Inflationary pressures in the euro zone are weakening as expected but wage growth remains high and the outlook remains highly uncertain, meaning the European Central Bank (ECB) must continue its fight against rising wages. price, declared Monday the president of the institution, Christine Lagarde.
The ECB raised its deposit rate to a record 4% this year to curb inflation but opted for a pause at its last meeting in October and markets began to anticipate a first rate cut next year. next, from April or June.
“Now is not the time to start declaring victory,” Christine Lagarde said in a speech to the European Parliament’s Economic and Monetary Affairs Committee.
“We must remain attentive to the different forces affecting inflation and firmly focused on our mandate of price stability.”
Christine Lagarde said she expected inflationary pressures to continue to ease while warning that overall price growth could accelerate in the coming months and that the medium-term outlook was surrounded by “considerable uncertainty.”
High interest rates, weakening economic growth and the slowdown in the labor market will help bring inflation back to the 2% target, Christine Lagarde estimated.
On monetary policy, the Frankfurt institute president repeated the ECB’s current mantra that keeping rates high for “long enough” will help restore price stability.
The ECB’s new economic forecasts expected in December, which will include projections for 2026 for the first time, will also be crucial, added Christine Lagarde.
(Written by Balazs Koranyi, Blandine Hénault for the French version, edited by Kate Entringer)
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