Market News

By Alexander Weber and Viktoria Dendrinou

(Bloomberg) -- President Christine Lagarde said the European Central Bank is “rather satisfied” with how inflation has slowed to below the 2% goal targeted by officials.

Speaking on Wednesday at an event hosted by the Atlantic Council in Washington, she described how policymakers have seen consumer-price growth weaken from a peak above 10%, and claimed credit for some of that.

“We are now below 2% for the moment, but we have reasons to believe that it will move up again above 2% in the next few months,” Lagarde said. “It’s really good progress that we have largely contributed to.”

While she didn’t directly address prospects for borrowing costs in her remarks, they do hint at the increasing confidence felt by officials in Frankfurt, who have judged inflation to be tame enough now to permit them to begin lowering interest rates. 

This month policymakers accelerated the pace of monetary loosening after the euro zone’s 20-nation economy began to flag. European short-dated bonds rallied on Wednesday as traders added to wagers of a half a percentage point interest-rate cut in December.

“We are attentive to growth, of course, because it impacts on inflation,” Lagarde said with regard to the economy itself. “It is that impact of growth on inflation that we are attentive to. It’s different from the Fed.”

Lagarde, who is attending the International Monetary Fund’s meetings in Washington, was more explicit on rates in an interview on Tuesday with Bloomberg Television.

“I think for me, the direction of travel is clear,” she said then, while insisting that a “pace to be determined” will be applied by officials. 

--With assistance from Bastian Benrath-Wright.