Lagarde: The labor market is finally adjusting

“We consider that our official interest rates have reached levels that, if maintained for a sufficiently long period, would make a significant contribution to a timely return of inflation to our target,” said ECB President Christine Lagarde.

Lagarde added to the European Parliament's Economic and Monetary Affairs Committee, "The labor market is finally adapting and may take more time to adapt. Job creation in the service sector is heading toward moderation and the overall momentum is slowing."

Speaking about the ongoing review of the ECB’s operational framework for the Short-Term Rate Directive, Lagarde explained, “Eurosystem staff analyze the optimal long-term size and composition of our balance sheet, and therefore the appropriate level of excess liquidity. This is not a trivial issue because it has implications for the way we deal with it.” To implement monetary policy.

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