Lagarde’s comments at the ECB press conference, Reuters

FRANKFURT (Reuters) – The European Central Bank cut interest rates for the fourth time this year on Thursday and kept the door open to further easing in 2025 as growth takes a hit from political instability at home and the risk of a new trade war with the United States.

The following are highlights of ECB President Christine Lagarde’s comments at the press conference following the policy meeting.

DIRECTION CLEAR

“The direction of travel – right now – is very clear… Obviously a lot of ground has been covered.”

INFLUENCE ON THE TARIFF

“The overall impact on inflation (of the tariffs) is uncertain…(it’s) a very complex situation with moving parts.”

UNSAFE APPEARANCE

“If there’s one thing we’ve talked about in recent days, it’s the level of uncertainty we’re facing.”

NEUTRAL RATE

“But have we talked about a neutral rate in the last few days? No.”

COMPOSITION OF INFLATION

“We would really like to see a change in the structure of inflation to make sure we are really close to the target.”

TWO-SIDED RISKS FROM INFLATION

“The risks to inflation… are more two-sided than they were before.”

INFLATION IN THE TRACK

“We had a Governing Council meeting which was the last one in 2024 and which really led us to admit, not yet victory against inflation, not yet mission accomplished, but it certainly led us to admit that inflation is indeed on the right track in terms of reaching our goal of 2% in the medium term.

“And you know that gave us some level of confidence to actually decide on the cut and to decide on the appropriate cut, which is, in our view, 25 basis points.” All members of the Governing Council agreed to that proposal.”

ABOUT THIS MONTH’S DISCUSSION ON RATE CUTS

“There has been some discussion … to consider possibly 50 basis points, but the overall agreement that everyone has come around to is that 25 basis points is actually the right decision.”

INFLATION TARGET

“In 2025, we will be at 2% and this is clearly reflected in the projections we have.”

RISKS OF INFLATION

“Inflationary upside risks also stem from heightened geopolitical tensions, which could push up energy and transportation prices and disrupt global trade.” Furthermore, extreme weather events and the spread of the climate crisis could increase food prices more than expected.

“Conversely, inflation may surprise to the downside if low confidence and concerns over geopolitical events prevent consumption and investment from recovering as quickly as expected, if monetary policy dampens demand more than expected, or if the economic environment in the rest of the world deteriorates unexpectedly.”

“Greater friction in global trade would make the outlook for inflation in the eurozone more uncertain.”

TRADE RISKS

“The risk of greater friction in global trade could affect eurozone growth by reducing exports and weakening the global economy.”

ABOUT INFLATION

“We expect inflation to fluctuate around its current level in the near term, as previous sharp declines in energy prices continue to fade from annual rates.” It should then stabilize at around 2% of the medium target.”

RISKS TO GROWTH

“Risks to economic growth remain tilted to the downside.”

CORE INFLATION

“Core inflation as a whole is developing in line with a sustainable return of inflation to the target value”.

TRADE TENSIONS

“More accessible credit should boost consumption, provided trade tensions do not escalate.”

ECONOMY FOR STRENGTHENING

“The economy should strengthen over time, albeit more slowly than previously expected.”

NO COMMITMENT ON ROAD PRICE

“We are determined to ensure that inflation stabilizes in a sustainable manner at our medium-term target of 2 percent.” We will follow a data-driven approach and meet to determine the appropriate stance of monetary policy.

“Our decisions on interest rates will be based in particular on our assessment of the outlook for inflation in light of incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.”

“We’re not committing to a particular rate path.”

MOMENTUM

“(Growth) is losing momentum.”

(Reuters Global News Desk)