European Central Bank (ECB) President Christine Lagarde has stated that the bank has a clear direction on the path of borrowing costs, but the pace of reduction remains to be decided, and she does not rule out taking more significant measures.

This week, finance ministers and central bank governors gathered in Washington for the annual meetings of the International Monetary Fund (IMF) and the World Bank. Speaking to the media at the event, Lagarde said that the process of disinflation is on the right track and described recent data as "relatively reassuring."

"I believe the direction is clear, and the approach we have taken since June is wise, and we should continue with this prudent approach," Lagarde said.

Last week, the ECB cut interest rates for the third time this year, lowering all three key rates by 25 basis points, adjusting the main refinancing rate, the marginal lending rate, and the deposit facility rate to 3.4%, 3.65%, and 3.25%, respectively.

"All week, people will say, oh, it should be 50 (basis points), it should be 25 (basis points)," Lagarde said. "The direction is clear, and the pace of rate cuts will be determined based on review and outlook factors, using three criteria and applying judgment."

Previously, the European Union's statistical office revised down the September eurozone CPI annual rate from 1.8% to 1.7%, marking the first time since 2021 that eurozone inflation has fallen below 2%. European Central Bank Governing Council member and Banque de France Governor François Villeroy de Galhau stated that the 2% stable inflation target could be achieved as early as the beginning of next year.

Austrian Central Bank Governor Robert Holzmann mentioned in another event that if prices fall faster than expected, it would allow the ECB to cut rates again soon. Banco de Portugal Governor Carlos da Costa also said that if data supports it, officials will be prepared to consider increasing monetary easing.

Although officials did not provide too many specific indications about the future path of interest rates, investors are betting that the ECB will cut rates by 25 basis points at each of the next four meetings, reducing the deposit rate to 2% by mid-2025.

Despite her optimistic outlook, Lagarde also said some cautious words, "We all believe that 2025 is the year we achieve our goals on a sustainable basis. But we must stay focused on everything.""At present, our energy prices are relatively low. There has been a slight decrease in our service sector prices, but not significantly. The last reading showed that we are still at 3.9%, and we must pay attention to local inflation."
Lagarde also stated that in Europe, the long-awaited increase in consumer spending is still expected to happen, but it is taking longer than anticipated, "The timeline is stretching, and European consumers are definitely not as strong as American consumers overall."