{"id":12204,"date":"2023-11-10T14:42:13","date_gmt":"2023-11-10T14:42:13","guid":{"rendered":"https:\/\/infundpros.com\/business\/ecb-will-not-start-cutting-rates-in-next-couple-of-quarters-christine-lagarde-says\/"},"modified":"2023-11-10T14:42:13","modified_gmt":"2023-11-10T14:42:13","slug":"ecb-will-not-start-cutting-rates-in-next-couple-of-quarters-christine-lagarde-says","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=12204","title":{"rendered":"ECB will not start cutting rates in \u2018next couple of quarters\u2019, Christine Lagarde says"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=b563afee-f5d1-4de3-9a73-6deaa44281c5\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>The European Central Bank will not begin cutting rates for at least \u201cthe next couple of quarters\u201d, its president Christine Lagarde has said.<\/p>\n<p>Lagarde told the Financial Times Global Boardroom conference on Friday that eurozone inflation would come down to its 2 per cent target if interest rates were kept at their current levels for \u201clong enough\u201d.<\/p>\n<p>But she added: \u201cIt is not something that [means] in the next couple of quarters we will be seeing a change. \u2018Long enough\u2019 has to be long enough.\u201d<\/p>\n<p>The ECB last month left its benchmark deposit rate unchanged, ending a series of 10 consecutive increases that has taken it from a record low of minus 0.5 per cent last year to an all-time high of 4 per cent in an attempt to tame inflation.<\/p>\n<p>Markets are now pricing in a 75 per cent probability of a rate cut by the ECB by April, up from a 30 per cent chance in early October.\u00a0<\/p>\n<p>Lagarde said eurozone inflation could still rebound from its recent two-year low, especially if there is another supply shock from the energy sector.<\/p>\n<p>Inflation in the 20-country single currency bloc slowed to 2.9 per cent in October, down from its peak of 10.6 per cent a year earlier. But core inflation, which strips out volatile energy and food prices, remained at 4.2 per cent \u2014 more than double the ECB\u2019s target.<\/p>\n<p>\u201cWe should not assume this 2.9 per cent respectable headline rate can be taken for granted,\u201d Lagarde said. \u201cEven if energy prices were to remain where they are, there will be a resurgence of probably higher numbers going forward and we should be expecting that.\u201d<\/p>\n<p>Already halfway through her eight-year term after replacing Mario Draghi in 2019, Lagarde has had to deal with a series of shocks that have exposed the fragility of the eurozone economy, including the coronavirus pandemic and Russia\u2019s full-scale invasion of Ukraine.<\/p>\n<p>Criticised for being too slow to tackle the biggest surge in inflation for a generation, Lagarde has overseen the most aggressive increase in interest rates in the history of the ECB.\u00a0<\/p>\n<p>Now she is trying to pull off a delicate balancing act: keeping borrowing costs at an elevated level for long enough to be sure that price pressures have been tamed, without causing a destabilising recession or a renewed debt crisis in the region.\u00a0<\/p>\n<p>The eurozone economy ground to a halt this year, with gross domestic product shrinking 0.1 per cent in the three months to September after growing only 0.2 per cent in the previous three quarters. Some economists think it could contract again in the fourth quarter.<\/p>\n<p>Lagarde said: \u201cWe are in this fascinating race against time where the calibration of our monetary policy has to be sustainable and subtle at the same time.\u201d<\/p>\n<p>Asked about the financial sustainability of some highly indebted eurozone members, such as Italy \u2014 where debt levels have risen above 140 per cent of GDP \u2014 she said: \u201cMany countries have taken advantage of very low interest rates to extend the maturity of their debt.\u201d Lagarde pointed out that the average debt service cost of eurozone countries was only 1.7 per cent. <\/p>\n<p>\u201cBut it is a fact that there will be refinancings coming up as redemptions come along, and the cost of financing will be increasing,\u201d she added.<\/p>\n<p>Lagarde said she was \u201ca little bit reassured\u201d by early signs that the finance ministers of Germany and France had this week moved closer towards agreeing on new fiscal rules for EU countries, which she said was \u201ccritically important\u201d to achieve.<\/p>\n<p>The EU\u2019s Stability and Growth Pact, which governs national spending and borrowing and is widely seen as unworkable, has been suspended since the pandemic hit in 2020 but is due to come back into force next year unless a reform is agreed before then.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/b563afee-f5d1-4de3-9a73-6deaa44281c5\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. The European&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-12204","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>ECB will not start cutting rates in \u2018next couple of quarters\u2019, Christine Lagarde says | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The European Central Bank will\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=12204\" \/>\n<meta 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