According to Christine Lagarde, the regulator has not finished its fight against inflation in Europe. It has just taken a pause to estimate the consequences of monetary policy tightening.
“We have already done a lot,” ECB President Christine Lagarde said. Although the overall result is quite positive, the central bank cannot relax. It will continue monitoring salaries and companies’ earnings, as well as the situation in the fiscal sphere and geopolitical developments. Decisions on future actions will be taken after an analysis of the current measures and their influence on the eurozone economy.
Notably, in September 2023, the European Central Bank raised the key rate to a record 4.5% per annum. The regulator may resort to one more hike in case of necessity. However, the main scenario does not suggest such actions. The fact is that in October, inflation approached its lowest level and totaled 2.9%. Against this backdrop, traders expect a first key rate cut in April 2024.
Curiously, most investors suppose that the Federal Reserve may also end its hiking cycle and start cutting the benchmark rate in 2024.
