Lagarde (ECB): «The combat in opposition to inflation will not be over. A “soft landing” will not be but assured» | EUROtoday

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“We have come a long way in fighting inflation… but our work is not done and we must remain vigilant.” ECB President Christine Lagarde mentioned this in her speech this night to the members of the ECB Forum, an annual occasion held in Sintra, Portugal, to debate financial coverage. Therefore, there isn’t a indication on the following charge lower.

“Given the size of the inflation shock, a ‘soft landing’ is not yet guaranteed,” Lagarde warned, assessing the prices of financial coverage when it comes to the affect of charge hikes on the economic system.

“But if our political path has helped tame inflation, it has also slowed economic growth,” Lagarde identified, including that “Interest rates have risen steadily and remained high while the economy stagnated for five consecutive quarters ».

“This is inevitable when central banks face shocks that push inflation and output in opposite directions. But this time, the costs of disinflation have been limited compared to similar episodes in the past,” Lagarde was keen to point out, highlighting the resilience of the labor market, the high level of employment and the low level of unemployment.

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Growing employment

“Employment has grown despite slowing GDP growth, adding 2.6 million people since the end of 2022. And unemployment is at a record low for the euro area, and well within the range seen during previous soft landings in major economies,” he emphasised.

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