KEYS OF THE NEW SHOULD OF INTEREST RAT OF THE ECB: INFLATION UNDER CONTROL AND MYSTERY ABOUT THE META LINE | Financial markets

The decision made between yesterday and today by the Governing Council of the European Central Bank has not been more predictable. The institution has re -cut the interest rates of the euro zone in a quarter quarter, to 2.75%, in which it has been the fourth consecutive reduction and fifth since it would undertake the change of course in its monetary policy in June last year. The decision has been made unanimously and without even being discussed a deeper, half -point. The economic growth of the euro zone is stagnant but Christine Lagarde has shown its confidence in its recovery and, above all, its conviction that inflation will finally allow this year to reach the objective of the ECB of a price level stable in the 2%. The road to more cuts is clear, but, once again, Lagarde has avoided giving clues of how far you are willing to reduce the price of money. Nor has it entered to value global risks for inflation and growth that Donald Trump’s presidency can mean.

2025, the year of triumph over inflation. In the absence of a concrete path for the cuts of types that are still, the most resounding message that has launched a lagarde is that this year the price stability objective will finally be reached in the euro zone that anxious the ECB, of an inflation in inflation in 2% stable. “The disinflation process is on the right track. Inflation has continued to evolve in line with our forecasts and is expected to return to our goal in the medium term of two percent throughout this year, ”said Lagarde. On the way there will still be the occasional shock, but nothing to do with the path full of potholes that the president of the ECB alluded months ago.

Lagarde barely warned of the risk that an increase in energy prices, an omnipresent danger with conflicts in Ukraine and the Middle East still open and with specific increases in oil as seen at the beginning of this year. Prices grew in the euro zone 2.4% in December, from 2.2% in November, largely due to energy. Lagarde does have recognized that inflation will fluctuate in the coming months, pointing to an additional rise in prices in the shortest term, and then stabilize in that 2% waiting for the ECB.

The services, the last border. Lagarde undoubtedly showed his confidence that the IPC of the euro zone falls this year to 2%, although recognizing that there is an area of ​​the economy that still resists prices cooling: the services sector. “Salaries and some services prices continue to adjust with a considerable delay to the past rebound in inflation,” said Lagarde, who has put as an example the insurance sector with the annual review of their policies. But the BCE president defends that all indicators point to a price mode also in services. “The next two data will show resistance, but the path is down 2025,” he insisted.

Anemic growth but without accelerating type cuts. The ECB meeting and the announcement of its new type cut has coincided today with the publication of the GDP data of the euro zone of 2024. It increased 0.7% in the year and stagnated completely in the fourth quarter. But that zero growth has not obscured the analysis of the Governing Council of the ECB. The half -point cut in interest rates has not even been on the table and the decision to reduce them in 25 basic points has been unanimous. The ECB does not believe that the price of money has to be reduced even more to lend a hand to a recovery in which it already trusts. “We are comfortable with achieving our inflation objective,” said Lagarde. A more intensity cut would also expand the gap in the types that has been opened with the Federal Reserve, which yesterday kept them unchanged in 4.25%-4.5%, and that can aggravate the weakness of the euro against the dollar . “The economy still faces adverse factors, but the improvement of real income and the gradual disappearance of the effects of restrictive monetary policy should over time support a recovery of demand,” said Lagarde.

Exports, an element in principle in favor. “Whenever commercial tensions are not aggravated, exports should support recovery as world demand increases,” said Lagarde. The president of the ECB has preferred not to load the inks on the tariff threat that looms over the euro zone and the planet with Donald Trump in the White House. If the president of the ECB fulfills his electoral promise to flood the world trade of exports tariffs towards the US, the impact on growth and inflation will also be global. But for the moment, there are only words and not concrete decisions. “There is nothing clear or tangible” to make decisions, said Lagarde. And as long as Trump do not disrupt the base stage of the ECB, the Central Bank maintains its confidence in recovery.

No neutral interest rate news. Lagarde was encouraged in the recent Davos forum to place the neutral interest rate in the euro zone between 1.75% and 2.25%. It would be the level to which interest rates do not constrain the economy or stimulate it. The ECB is getting closer to that level, after having reduced the price of money at 125 basic points since June 2024. But Lagarde said today that the debate has not yet begun within the ECB and that it is premature to start it. He has insisted that the next decisions will be taken to meeting, depending on the available data, and has recognized in any case that the monetary policy in the euro zone continues to be restrictive. There will be more type cuts, but Lagarde still does not give clues where the finish line will be. The market awaits between two and three additional sales of the fourth point, at least in the next meetings of March and June. And there are signatures like Bank of America that even place the point of arrival at 1.5%. In the market, the probability of a half -point cut at the March meeting has already grown and the profitability of the sovereign bonds of the euro zone has declined today. The two -year German bond has been cut in 10 basic points.