(Bloomberg) -- European Central Bank President Christine Lagarde affirmed that the slowdown in consumer prices is continuing, though she highlighted lingering risks from wage pressures.
“The incoming information on inflation shows that the disinflation process is well on track,” Lagarde said Friday in a statement at a meeting of the International Monetary and Financial Committee in Washington. “Recent indicators of economic activity have surprised somewhat to the downside and financing conditions remain restrictive.”
Having recently cut interest rates for a third time this year, ECB officials are discussing whether an even bigger step might be needed when they next meet in December. While more dovish policymakers have raised concerns about the euro area’s struggling economy, more hawkish officials have pushed back against hastening monetary easing.
Lagarde has weighed in as well, telling Bloomberg TV on Tuesday that while the direction for borrowing costs is clear, the pace of cuts is yet to be decided. Her remarks on Friday largely echo the language the ECB used after last week’s Governing Council meeting.
Lagarde also said:
- “Risks to growth remain tilted to the downside. Lower confidence could prevent consumption and investment from recovering as quickly as expected”
- “Most measures of underlying inflation have been gradually moderating in recent months”
- “However, domestic inflation remains elevated, with strong price pressures coming from wages in particular. Wage growth has continued to be strong, but overall growth in labor costs has been moderating in recent quarters and profits have been buffering the impact of higher wages on inflation”
- “The labor market remains resilient, but indicators point towards cooling labor demand on the back of weaker economic activity”
- READ MORE: ECB Officials Debate If a Half-Point Cut Really Needed
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