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MNI BRIEF: ECB "Still Far From Neutral Rate" - Lagarde

(MNI) LONDON

ECB President hints rates could ease and still produce a restrictive policy stance.

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The European Central Bank’s interest rate is still a long way from neutral, with a fair degree of restriction still in place, President Christine Lagarde said Thursday, without revealing any Governing Council estimate of r* -- the neutral rate.

If the neutral rate has increased compared to pre-Covid times, "we also know that we are far away from the neutral rate now," Lagarde said, suggesting more restrictiveness could be removed and still meet the policy commitment to "keep policy rates sufficiently restrictive for as long as necessary to achieve this aim". (See MNI SOURCES: ECB To Hold In July, Signal Likely September Cut)

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The European Central Bank’s interest rate is still a long way from neutral, with a fair degree of restriction still in place, President Christine Lagarde said Thursday, without revealing any Governing Council estimate of r* -- the neutral rate.

If the neutral rate has increased compared to pre-Covid times, "we also know that we are far away from the neutral rate now," Lagarde said, suggesting more restrictiveness could be removed and still meet the policy commitment to "keep policy rates sufficiently restrictive for as long as necessary to achieve this aim". (See MNI SOURCES: ECB To Hold In July, Signal Likely September Cut)

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