Lagarde: Interest rates not on linear decline path

European Central Bank President Christine Lagarde signaled that the June rate cut would not be quickly followed by new ones. European Central Bank President Christine Lagarde signaled that her bank would take cautious steps and that the June rate cut would not be quickly followed by new ones. Speaking to several European-based newspapers, Lagarde said the following about the June decision: “We made the appropriate decision, but this does not mean that interest rates are on a linear decline. There may be periods when we keep interest rates steady again.” Lagarde said that they will reassess the situation at every meeting, not just when they present new projections about the economy. Eurozone May inflation exceeded expectations at 2.6 percent, and the first-quarter wage increase data, which the ECB is closely monitoring, was also above estimates. While Lagarde said that these data could have been better, she said, “Nevertheless, we thought that disinflation had progressed sufficiently and we lowered interest rates as we expect the development to continue over the next 18 months.” The ECB expects to reach its 2 percent inflation target after 18 months, in other words, by the end of 2025.