Lagarde comments at ECB press conference
Oct 17 (Reuters) -The European Central Bank cut interest rates for the third time this year on Thursday, by a quarter point, saying inflation in the euro zone is now increasingly under control but the economic outlook has worsened.
Following are highlights of ECB President Christine Lagarde's comments at a news conference after the policy meeting.
STILL RESTRICTIVE
"I've made the point we are restrictive at the moment. At the current rate, even with the 25 basis-point cuts, we will continue to be restrictive, and we believe that it is necessary and would have to continue to be so until we are confident that we are reaching the 2% target in the medium term. And that will come in due course. But we are not there yet."
FOOD PRICES AND INFLATION
"Food prices are still growing at 2.4% on average in the euro area, and this is not the 2% that we want. We are clearly still above target and it's one area together with energy prices to which consumers are highly sensitive, which has a bearing on what they do, whether they consume, whether they save, which matters a lot. So we are extremely attentive.
"We know that food prices in particular are very sensitive and we know that we are not at target yet on that front. But are we breaking the neck of it? Yes."
INFLATION PROGRESS
"Have we broken the neck of inflation. Not yet. Are we in the process of breaking that neck? Yes."
DATA SURPRISE
"We were all a little bit surprised by the acceleration (of data) that is being demonstrated by the number. But it certainly raised our confidence that the disinflationary process is well on top."
INFLATION NOT AT TARGET SUSTAINABLY YET
"Even if it could be as markets anticipate... that the time at which we reach that 2% sustainably has advanced a bit, it is not yet now. We will have to wait further."
MONETARY POLICY IS WORKING
"What the data is showing is that our monetary policy is working."
SOFT LANDING
"Are we still on a soft landing expectations? The answer is, on the basis of the information that we have, we certainly do not see a recession. So the euro area, on the basis of what we have, is not heading for recession. And we are still looking at that soft landing."
GROWTH CONCERNS
"We are concerned about growth to the extent that it has an impact on inflation."
NOT OPENING A DOOR
"I did not open the door to anything. I repeated that at each and every meeting we will look at the data. Hence we will be data-dependent. Not data-point dependent, nor anything else, data dependent. All of it.
"We will determine what is the best rate, what is the best speed? How far, how deep we have to go in order to return inflation to its 2% medium term target. This is what we will do in December and I would not give any other commitment, not make any other statement in that respect, as I said in the monetary policy statement that I read earlier on, we are not pre committing."
INFLATION FORECAST
"We still have risks on both sides of our forecast - upside and downside - probably a bit more on one than the other, probably more downside risk than upside risk, but I'm talking here about our forecast for inflation."
CALIBRATE DECISION
"We don't recalibrate, we calibrate."
UNANIMOUS DECISION
"We had discussions and debates and rationales and narratives, and all of that is part of the debate and the legitimate discussions that we have within the Governing Council.
"But at the end of the day, there was a unanimous decision to cut rates by 25 basis points."
ECONOMIC ACTIVITY
"It is a fact that the economic activity has come in... a bit below what we had anticipated."
NO PRE-COMMITTING
"We will continue to follow a data-dependent and meeting by meeting approach to determining the appropriate level and duration of restriction.
"We are not pre-committing to a particular rate path. In any case, we stand ready to adjust all of our instruments within our mandate to ensure that inflation returns to our medium term target and to preserve the smooth functioning of monetary policy transmission."
ECONOMIC DATA
"All the information we received in the last five weeks since our last monetary policy decision were heading in the same direction - lower."
INFLATION OUTLOOK
"Inflation could turn out higher than anticipated if wages or profits increase by more than expected. Upside risks to inflation also stem for the heightened geopolitical tensions, which could push up energy prices."
DOMESTIC INFLATION
"Domestic inflation is still elevated as wage pressures in the euro area remain strong. Negotiated wage growth will remain high and volatile for the rest of the year, given the significant role of one-off payments, and the standard nature of wage adjustments."
GROWTH RISKS
"The risks to economic growth remain tilted to the downside. Lower confidence could prevent consumption and investment from recovering as fast as expected. This could be amplified by sources of geopolitical risk, such as Russia's unjustified war against Ukraine and the tragic conflict in the Middle East, which could also disrupt energy supplies and global trade. lower."
SLUGGISH GROWTH
"The latest data point to more sluggish growth. Businesses are expanding their investment only slowly, while housing investment continues to fall. Exports have weakened, especially for goods."
DISINFLATION ON TRACK
"The incoming information on inflation shows that the disinflationary process is well on track. The inflation outlook is also affected by recent downside surprises in indicators of economic activity."
"Inflation is expected to rise in the coming months before declining to target in the course of next year, domestic inflation remains high, as wages are still rising at an elevated pace. At the same time, labour cost pressures are set to continue easing gradually, with profit partially buffering the impact on inflation."
WEAKER ECONOMY
"The incoming information suggest that economic activity has been somewhat weaker than expected."
(Reuters Global News Desk)
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