The European Central Bank (ECB) has lowered its key interest rates by 25 basis points, in line with markets' expectations.
The president of ECB's Governing Council, Christine Lagarde, is about to take the stage in Frankfurt to justify the decision, comment on the economic and monetary outlook for the Euro Area and answer questions from journalists.
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Open real account TRY DEMO Download mobile app Download mobile appBelow you will find key insights delivered by Mrs. Lagarde:
- The desinflation process is well on track, with the subsequent HICP readings aligning with ECB's projections. Prices are still adjusting to the previous changes, with inflation expected to arrive at the target at the steady pace. Lagarde is confident that inflation will be back to the 2-percent target in 2025.
- Today's decision was unanimous and 50-point cut was not at all considered.
- Wage growth remains moderated, with rising real incomes sparking hope for increased demand and spending from households. Consumer confidence is still fragile, waiting for the boost in courage from real wages growth. Job market proves robust.
- Although lowered rates are starting to facilitate borrowing for firms and households, the financial conditions remain tights, as past interest hikes are still transmiting into the economy (ex. via loan rollover).
- Euro Area economy stagnated in Q4 2024 and is set to remain weak in near term. Manufacturing is still contracting, which is slightly counterbalanced by the expanding services. Lagarde adheres to the European Commision's guidance to boost the european competetiveness via fiscal and structural changes.
- Frictions in international trade are the main risk factor for the EU's economy and lowered exports could as well hinder european labour market. Inflation may surprise on the downside, should the geopolitical risks have a stronger-than-expected impact on spending and buisness activity in the EU.
- Lagarde sees the discussion about the neutral rate as still premature.
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