European Central Bank President Christine Lagarde has stated that services inflation doesn’t need to reach the 2% target for the ECB to consider interest rate cuts. While overall euro-zone inflation has moderated to 2.5%, services inflation remains high at 4.1%, largely due to wage pressures. Lagarde emphasized the need to balance goods and services inflation and consider the lagged impact of Europe’s labor system on wages. This stance suggests a more nuanced approach to monetary policy, potentially allowing for rate cuts even if services inflation remains above target.
