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Cutting interest rates too soon in Europe risks progress against inflation, central bank chief says

European Central Bank head Christine Lagarde says cutting interest rates too soon could threaten Europe’s progress in battling the inflation that has ravaged the economy

By DAVID McHUGH
Published - Jan 17, 2024, 09:03 AM ET
Last Updated - Jan 17, 2024, 09:03 AM EST

FRANKFURT, Germany (AP) — Cutting interest rates too soon could threaten Europe’s progress in battling the inflation that has ravaged the economy, the head of the European Central Bank said Wednesday amid widespread speculation that the bank soon will lower rates from record highs.

Christine Lagarde, faced with market expectations for rate cuts as soon as March or April and a bank meeting next week, underlined the ECB’s intent to keep its benchmark rate high for “as long as necessary” until it’s clear that inflation is back to the goal of 2%.

“I know some people argue that maybe we are overshooting, maybe we’re taking risks," Lagarde said.

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