European Central Bank president Christine Lagarde noted at her post-meeting press conference that production in the euro area is still subdued, while tightness in tightness in the region's labour market continues to gradually decline, services price inflation remains high (at 4% in March), and more recent indicators point to further moderation in wage growth.
The ECB's chief added that inflation is expected to decline to the ECB's 2% target next year, whereas production is seen to pick up in coming quarters. However, she warned that inflation could turn out higher if wages climb or profit margins remain elevated.
Lagarde emphasised that if the ECB achieves further confidence in the outlook, it would be appropriate to lower rates, noting that the policymakers are not pre-committing to a particular rate path.
The official also revealed that a few members of the Governing Council felt sufficiently confident to cut rates, while a very large majority wanted more data. Lagarde admitted that the ECB will get some data in April and, in June, it will have a lot more data and information, as well as new projections. "We will be looking at data and whether it confirms our hope that inflation is on the path to our forecasts," she said, adding that if disinflation continues, the rate path will reflect that. According to the ECB's boss, the bank's policymakers are observing a decline in inflation that's comforting them.
In addition, Lagarde stated that the ECB is data-dependent, not the Fed-dependent and Highlighted the differences in the Eurozone versus U.S. inflation, including consumption and fiscal response.