Lagarde Says ECB Doesn’t Need Services Inflation at 2%
(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.
Most Read from Bloomberg
Democrats Weigh Mid-July Vote to Formally Tap Biden as Nominee
S&P 500 Closes Above 5,500 in Record-Breaking Run: Markets Wrap
‘Upflation’ Is the New Retail Trend Driving Up Prices for US Consumers
Trump Immunity Ruling Means Any Trial Before Election Unlikely
“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.
Most Read from Bloomberg Businessweek
The Fried Chicken Sandwich Wars Are More Cutthroat Than Ever Before
Japan’s Tiny Kei-Trucks Have a Cult Following in the US, and Some States Are Pushing Back
China’s Investment Bankers Join the Communist Party as Morale (and Paychecks) Shrink
For Tesla, a Smaller Drop in Sales Is Something to Celebrate
©2024 Bloomberg L.P.