- European Central Bank President Christine Lagarde said an interest rate cut is possible next month, with accelerating consumer price increases now largely contained, according to Bloomberg.
- “If the data we are receiving reinforces our confidence that we will reach 2% inflation in the medium term, which is our goal, our mission, our duty, then there is a strong possibility of a rate cut on June 6,” Lagarde said in a television interview with Ireland’s RTE One broadcast on Tuesday.
- “I’m really confident that we’ve got inflation under control,” she continued. “The projections that we have for next year and the year after are very close to the target, if not there already, so I’m confident that we’ve got the rate of inflation under control.”
- This is the first widely announced move by officials on upcoming monetary policy, and deposit rates, which have hit a record low of 4% since last fall, are expected to be cut by a quarter point, as investors price in another move of this size in September and also tilt toward a final move in 2024 in December.
- ECB Governing Council members are reluctant to commit to a specific interest rate path, a sentiment Lagarde expressed during that interview, though many have suggested that market bets may be similar to their thinking.
- Eurozone inflation has slowed sharply, although it stood at 2.4% in April, and is not expected to fall back to the ECB's target of 2% until the second half of next year.
- Lagarde reiterated that her goal is to “bring inflation down to 2%, 2%, 2%, and that’s the job done, that’s what I’m trying to do.”
