(Bloomberg) -- The European Central Bank must stay cautious, and last week’s cut in borrowing costs won’t necessarily be followed by further rapid moves, according to President Christine Lagarde.

“We’ve made the appropriate decision, but it doesn’t mean interest rates are on a linear declining path,” she said in an interview with leading European newspapers. “There might be periods where we hold rates again.”

Euro-zone borrowing costs aren’t on a predetermined trajectory, the president reiterated. 

“At every step of the way, not only when we have new projections, we will reassess,” she said according to a pre-release by Handelsblatt on Monday. The interview was also published in Expansion, Il Sole 24 Ore and Les Echos.

The ECB delivered a widely anticipated rate reduction last Thursday, a move that jarred both with its higher projections for inflation and with a backdrop of stronger-than-expected wage growth and consumer prices. Investors were left querying where policy is headed next.

Inflation in the 20-nation bloc accelerated by more than anticipated to 2.6% in May, with a surge in services prices and a strengthening of underlying pressures being even more worrisome. Wage growth in the first quarter was also much higher than expected.

In the interview, Lagarde said that some recent numbers “could have been better.” But she added that “we felt that disinflation was sufficiently advanced and would continue to progress over the next 18 months, and so we could cut rates.” The ECB expects inflation to reach 2% again toward the end of next year.

Austria’s Robert Holzmann opposed last week’s decision, while other officials in recent days at least urged caution, further dampening expectations on subsequent rapid cuts. Ireland’s Gabriel Makhlouf last week said policymakers don’t know “how fast we’re going to carry on, or if at all.”

Bundesbank President Joachim Nagel said on Monday that the ECB may not lower borrowing costs again for a while as it watches to see how quickly price growth recedes to target.

“We’re not declaring victory yet,” Lagarde said in Monday’s interview, highlighting wages, unit profits and productivity as important drivers of services inflation — “which is our weak spot.” On the real economy, she argued that “the growth outlook has improved” and that “the economy is going to strengthen.”

Asked why the ECB’s policy statement last week didn’t refer to reducing the current level of monetary-policy restriction, she responded that “removing the easing bias was dictated by our wanting to be data dependent, with a real understanding of where we are heading and when we will reach 2%.” Given high uncertainty, “forward guidance is not going to help us,” Lagarde said. 

The president also said that the natural interest rate “is likely to be higher than before the pandemic, but we are currently still far away from it.” Therefore “it’s pointless to start discussing that now,” she said.

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