ECB Close To Meeting 2% Inflation Goal

The European Central Bank (ECB) is nearing its target for consumer price inflation but must remain cautious about risks in certain sectors, President Christine Lagarde stated, as reported by Jana Randow for Bloomberg News.

The ECB is concluding a year of scaling back its unprecedented monetary tightening.

“We’re getting very close to that stage where we can declare that we have sustainably brought inflation to our medium-term 2% target,” Lagarde said during a Financial Times podcast recently released.

“I’m saying that with a little reservation because I still believe that we should remain very vigilant about services.” She pointed out that price gains in the services sector remain almost double the ECB’s target.

Lagarde also urged policymakers to monitor wage growth and corporate profit trends within the 20-nation eurozone.

The remarks come as the ECB concludes a year of scaling back its unprecedented monetary tightening. Economists expect the central bank to cut the deposit rate four more times in 2025, following four reductions in 2024, bringing the rate to 2% by mid-2025 from the current 3%.

Most officials advocate for a “gradual” approach to loosening policy, which markets generally interpret as incremental 25 basis-point adjustments.