ECB governor says disinflation process 'on track,' notes downside risks amid global tensions

By Gokhan Ergocun

ISTANBUL (AA) - European Central Bank (ECB) Governor Christine Lagarde said on Friday that the disinflation process is "well on track," based on recent inflation data.

"While global growth is projected to expand at a moderate pace, risks to the outlook have shifted to the downside, reflecting rising economic policy uncertainty against a backdrop of heightened geopolitical tensions," she said at the IMF Annual Meeting in Washington.

Lagarde highlighted that global headline inflation is receding, driven by decreasing energy prices, the normalization of supply conditions, and continued tight monetary policies.

The ECB lowered its policy interest rates by 25 basis points this month. "The decision to lower the deposit facility rate – the rate through which it steers the monetary policy stance – reflects the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation, and the strength of monetary policy transmission," Lagarde explained.

She emphasized that the ECB’s governing council will keep policy rates sufficiently restrictive for as long as necessary to achieve its medium-term inflation target of 2%.

In September, the euro area’s annual inflation rate was 1.8%, falling just short of market expectations of 1.9%.