Lagarde softens expectations on monetary policy

This dampens expectations for a board meeting to be held in mid-December. The European Central Bank was expected to determine whether and when to allow the emergency PEPP program to expire and provide the first indications of a possible interest rate shift, as the US Federal Reserve has already done.

It is confident that the 1.85 trillion euro emergency bond purchase program (PEPP) can expire in March. Even if there are no more purchases, expired papers will continue to be replaced as part of the programme, Franzsen said in an interview with Reuters news agency.

It is clear that many ECB boards avoid specifying at an early stage how things should proceed after the end of the PEPP with bond purchases, for example through the smaller APP. In the opinion of its Vice President Luis de Guindos, however, the ECB will continue to use bond purchases as an economic stimulus even after the end of the Economics Environmental Protection Program (PEPP).

Lagarde also emphasized that a rate hike next year is highly unlikely. But if the tightening conditions are met, the central bank will be ready to act without hesitation.

The European Central Bank has practically fixed low interest rates in its expectations for a long time. It wants to keep it at the current level or even lower so it can be seen that inflation has reached 2% and that it is also stuck there. The key rate has been 0.0 percent since March 2016.