Jul 2, 2024
Lagarde Says ECB Doesn’t Need Services Inflation at 2%
Bloomberg News
,![Christine Lagarde, president of the European Central Bank (ECB), left, and Michael McGrath, Ireland's finance minster, at the Eurogroup meeting in Luxembourg, on Thursday, June 20, 2024. The Eurogroup will hold a fifth exchange of views on euro area competitiveness, focusing on the role of industrial policy, according to their website. Photographer: Simon Wohlfahrt/Bloomberg, Bloomberg Christine Lagarde, president of the European Central Bank (ECB), left, and Michael McGrath, Ireland's finance minster, at the Eurogroup meeting in Luxembourg, on Thursday, June 20, 2024. The Eurogroup will hold a fifth exchange of views on euro area competitiveness, focusing on the role of industrial policy, according to their website. Photographer: Simon Wohlfahrt/Bloomberg](/polopoly_fs/1.2092083.1719955226!/fileimage/httpImage/image.jpg_gen/derivatives/landscape_620/christine-lagarde-president-of-the-european-central-bank-ecb-left-and-michael-mcgrath-ireland-s-finance-minster-at-the-eurogroup-meeting-in-luxembourg-on-thursday-june-20-2024-the-eurogroup-will-hold-a-fifth-exchange-of-views-on-euro-area-competitiveness-focusing-on-the-role-of-industrial-policy-according-to-their-website-photographer-simon-wohlfahrt-bloomberg.jpg)
(Bloomberg) -- The European Central Bank doesn’t need services inflation — a key focus as policymakers determine how much to lower interest rates — to slow to the 2% target, according to President Christine Lagarde.
“Obviously, we don’t need to have services at 2% because manufacturing goods are below 2% and at the end of the day it’s going to be a balance between goods and services,” she told a panel Tuesday in Sintra, Portugal.
“But we have to look really what is behind it,” she said. “And what’s behind it is a lot of wages. Services has a very high component of labor. Wages also suffer from the lag impact of the labor system that we have in Europe.”
While euro-zone inflation moderated a touch in June to 2.5%, according to data published earlier Tuesday, services held steady at 4.1%. Such price pressures are making many ECB officials wary to promise more rate cuts, following their initial reduction last month.
- Read more: Euro-Zone Inflation Slows as Lagarde Plays for Time on Rates
--With assistance from Marilen Martin.
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