ECB governor sees disinflation on track but warns of global risks

European Central Bank (ECB) Governor Christine Lagarde announced on Friday that the disinflation process is “well on track,” according to recent inflation figures.

“While global growth is projected to increase at a moderate pace, the risks to the outlook have shifted to the downside due to growing economic policy uncertainty amid rising geopolitical tensions,” she stated during the IMF Annual Meeting in Washington.

Lagarde pointed out that global headline inflation is declining, driven by lower energy prices, improved supply conditions, and sustained tight monetary policies.

This month, the ECB cut its policy interest rates by 25 basis points. “The decision to reduce the deposit facility rate reflects the Governing Council’s updated evaluation of the inflation outlook, underlying inflation trends, and the effectiveness of monetary policy transmission,” she clarified.

She emphasized that the ECB’s governing council will maintain sufficiently restrictive policy rates as long as necessary to achieve its medium-term inflation target of 2%.

In September, the annual inflation rate in the euro area was recorded at 1.8%, just below the market expectation of 1.9%.
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