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🇮🇹 Italy /Economy & Trade

Lagarde non-committal on rates, decision 'in June'

From ANSA · () Italian

Translated from Italian, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • European Central Bank President Christine Lagarde remained non-committal on future interest rate decisions, stating the next move will be known on June 11.
  • She cited "maximum uncertainty" in the current global situation, influenced by developments in the Iran conflict and US-EU relations.
  • Lagarde emphasized adherence to deficit and debt rules, advising against measures that could fuel inflation, and encouraged reforms to boost growth.

European Central Bank President Christine Lagarde has adopted a cautious stance regarding future interest rate adjustments, deferring any definitive decisions until the next Governing Council meeting on June 11. While she previously indicated a clear direction for monetary policy in late April, Lagarde now cites "maximum uncertainty" as the primary reason for her reticence. This uncertainty stems from evolving global events, including potential de-escalation in the Iran conflict and ongoing diplomatic exchanges between the US and Tehran, which could impact inflation expectations.

the decision "you will know on June 11" at the next ECB board meeting

— Christine LagardeOn the timing of the next ECB interest rate decision.

Lagarde stressed the ECB's commitment to maintaining inflation at 2% in the medium term. She suggested that a potential easing of geopolitical tensions could temper inflation expectations, possibly leading the ECB to hold rates steady to avoid hindering economic growth. The ECB president also sidestepped a question about former US President Donald Trump's past tariff announcements, responding with a simple "no" when asked about her thoughts at the time.

no, because the current situation is one of maximum uncertainty

— Christine LagardeResponding to a request for any hint about future interest rate decisions.

Turning to Italian economic policy, Lagarde firmly stated that adherence to deficit, debt, and budget rules is essential. Responding to questions about potential deviations from the Stability and Growth Pact, similar to defense spending exceptions, she reiterated the ECB's stance against broad energy crisis measures. The bank prefers "tailored, temporary, and targeted" interventions, warning that wider support could inflate demand when supply is constrained, thereby increasing inflation. Instead, Lagarde advocated for reforms to stimulate growth, downplaying concerns about Italy's projected low growth rate within the Eurozone.

we will keep inflation at 2% in the medium term

— Christine LagardeOn the European Central Bank's inflation target.

Lagarde offered a broader economic outlook, predicting that overall European growth would remain below 1% in 2026. She rejected the notion of austerity, asserting that European countries are not in an austerity situation. She also highlighted the Next Generation EU program, translated into Italy's PNRR, as a significant "European action" taken in response to the pandemic-induced economic crisis.

We must adhere to the rules of deficit, debt, and budget, and operate within these rules

— Christine LagardeRegarding Italy's request for flexibility on deficit spending.
DistantNews Editorial

Originally published by ANSA in Italian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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