European Central Bank President Christine Lagarde said the financial institution still has a long way to go to control inflation, after announcing the start of cutting key interest rates for the first time since 2019.
In an opinion article published Friday night in European newspapers, Lagarde said that inflation has slowed significantly and is expected to reach the target (2 percent) by next year.
But she warned that there was still a long way to go to keep inflation out of the economy. It wouldn't be a smooth ride.
She stressed that interest rates should therefore remain restrictive for as long as necessary to ensure sustainable price stability. In other words, we still have to put our foot on the brakes for a while, even if we are not pressing as hard as before.
The central bank began cutting key interest rates on Thursday for the first time since September 2019. The deposit rate was cut to 3.75 percent, after reaching its highest level in September 2023 at 4 percent.
This is expected to provide long-awaited support to the eurozone economy.
However, the continental monetary institution confirmed that it will keep rates restrictive as long as necessary, stressing that it will not commit in advance to a specific rate regarding interest rates.
Lagarde explained in her article that we have made significant progress, but our battle against inflation is not over yet, adding that as guardians of the euro (the single European currency), we are committed to ensuring low and stable inflation for the benefit of all Europeans.
