Interview with Christine Lagarde, President of the ECB, conducted by Andrés Stumpf, Stefan Reccius, Isabella Bufacchi, Guillaume Benoit and Alexandre Counis in Paris on 7 June 2024

11 June 2024

What lessons do you draw from the restrictive monetary policy cycle that’s just finishing? You said you wouldn’t say the ECB is in a cutting cycle. But could the ECB stop after just one cut without raising credibility concerns?

First of all, we haven’t finished the restrictive monetary policy cycle yet. If you look at real interest rates, we’re still in restrictive territory and we have to continue as long as necessary to return inflation to 2%. There are different phases of a monetary policy cycle. The first one was a rapid and vigorous tightening: 450 basis points in little more than a year, during which we divided inflation by half, from 10.6% down to 5.2%. Then we went into the holding phase. This lasted nine months, taking inflation from 5.2% to 2.6%. Especially in the last part…