Lagarde says ECB will cut rates ‘in short order’ barring ‘major shocks’

The European Central Bank is still on track to start cutting interest rates “in reasonably short order”, its president Christine Lagarde said, providing there are no major shocks from the Middle East or other geopolitical hotspots.

Lagarde on Tuesday said the ECB was “observing a disinflationary process” in line with its forecasts that made it confident eurozone inflation would reach its 2 per cent target by the middle of next year, even if the path there is likely to be “bumpy”.

“If we don’t have a major shock in developments, we are heading towards a moment where we have to moderate the restrictive monetary policy that we have, in reasonably short order,” she told CNBC. 

While the ECB is “constantly monitoring” the impact of rising tensions in the Middle East and elsewhere on commodity markets, she said they had been “relatively moderate”.

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