ECB CAN NOT COMMIT TO RATE PATH EVEN AFTER FIRST CUT

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ECB CAN NOT COMMIT TO RATE PATH EVEN AFTER FIRST CUT – Inflation in the eurozone has fallen from a double-digit percentage increase

The European Central Bank cannot commit to a pre-set number of interest rate cuts even after it starts reducing borrowing costs as that will depend on incoming data, ECB President Christine Lagarde has said.

Many ECB policymakers have expressed support for a first reduction in borrowing costs from their current record highs, most likely in June, with the debate now focused on how many more cuts would follow.

But Lagarde appeared to try to dampen such speculation on Wednesday even as she acknowledged that incoming data about wages and inflation had been encouraging.

Inflation in the euro zone has fallen from a double-digit percentage increase in the autumn of 2022 to 2.6% last month.

Lagarde spelled out the conditions needed for the ECB to start cutting rates: slowing wage growth, a continued fall in inflation and new internal projections confirming that price growth is returning to its 2% target.

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