ECB President warns: Services inflation remains worrying!

ECB President warns: Services inflation remains worrying!

Christine Lagarde, President of the European Central Bank (ECB), sees the ECB on the verge of achieving its target of an inflation rate of 2 percent for the euro zone. In an interview with the Financial Times, she emphasized that inflation is currently at 2.2 percent. However, inflation in the service sector is particularly worrying, remaining stable at 3.9 percent and showing minimal changes. Lagarde warned that one must remain very vigilant as inflation in this area remains high, hovering around 4 percent, as well Vienna.at reported.

Expected interest rate cuts and economic forecasts

In response to these developments, senior ECB officials are signaling that further interest rate cuts are expected next year. This already happened this year when the key interest rate was reduced four times and is now at 3.0 percent. Lagarde explained: "If the incoming data continues to confirm our baseline, the direction is clear. We expect to cut interest rates further." This strategy aims to further advance the disinflation process, as well Tagesschau.de carried out.

While the ECB is optimistic about the inflation target, uncertainty remains about the economic outlook. Ireland's central bank chief Gabriel Makhlouf expressed similar concerns and argued for gradual interest rate cuts, saying there was no need for sudden changes in monetary policy. The reference to the economic conditions and the upcoming political developments, such as the uncertain approach of the new US President, illustrates the challenging situation for the ECB.