ECB President Lagarde: Never say that the European Central Bank has finished cutting interest rates.

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On Tuesday, ECB President Lagarde stated that although she reiterated that monetary policy and the economy are in good shape, she cannot yet declare that the rate-cutting cycle is over. When the media asked Lagarde whether monetary easing had ended, she replied, “I would never say that, because I believe a central bank president’s job is never truly finished.”

Investors and analysts generally believe that after eight rate cuts in a year, bringing the ECB’s deposit rate down to 2%, the rate-cutting cycle may have ended. However, some officials still do not want to completely rule out the possibility of further rate cuts, as forecasts show that weak growth could lead to inflation being below target in the coming years. Lagarde said:

We are prepared just in case. Because even though we are in good shape now, the situation could still change.

So far, we have tamed inflation. We are in a good position, but we must be prepared for anything that might happen.

After the eurozone reached a trade agreement with the United States, uncertainty has eased significantly. Lagarde stated that the risks to economic expansion are more balanced, and inflation risks are also relatively balanced.

Lagarde and her colleagues have repeatedly said they are satisfied with the current monetary policy settings. Policymakers are confident that current interest rates are sufficient to achieve the 2% inflation target, even though the eurozone economy is still under pressure from higher U.S. tariffs and renewed political turmoil in France.

The International Monetary Fund (IMF) believes that persistent high uncertainty and higher tariffs are the main reasons for the weak outlook of the European economy. The IMF’s new forecast released on Tuesday shows that Europe’s gross domestic product (GDP) will grow by 1.2% this year, slightly better than previously expected; growth in 2026 is expected to be 1.1%, slightly lower than previous forecasts.

The IMF’s forecast is broadly consistent with the ECB’s own projections, which the central bank will update in December. At that time, discussions about further rate cuts may heat up again.

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