The next European Central Bank (ECB) interest rate meeting will "open the door wider," although policymakers will have more information to decide whether another cut is needed, according to President Christine Lagarde.
"The question of expectations in September and what we will do in September is wide open and will be determined based on all the data we will receive," Lagarde told reporters after the ECB kept the deposit rate at 3.75%.
He said officials have been looking at the three key elements underpinning their inflation outlook -- wage growth, corporate profit margins and productivity -- and will "have more of that in the coming weeks and months."
"If the data actually confirms the disinflation process that is currently underway, it will strengthen our confidence" in returning consumer price growth to the 2% goal by the end of 2025, as currently forecast, Lagarde said on Thursday.
After last month's big tapering, the ECB is considering whether eurozone inflation has cooled enough to allow for further moves. Although June saw a slight decline to 2.5% from 2.6%, fundamental pressures remained firm and service cost increases again exceeded 4%.
Policymakers are taking a cautious approach with their plans. But some lawmakers in recent weeks have tentatively backed the market's bet on one or two more cuts this year. The expectation is that they will be ready for the first at the next policy meeting in two months.
By then, they will have a new economic forecast and two more inflation readings, as well as figures on wages, profits and productivity. There may also be more clarity on the direction of the Federal Reserve, with markets expecting the first reduction in US borrowing costs a week after the ECB meeting in September.
