ECB's Lagarde Rejects 'Political Pressure' after Italy Seeks Bigger Rate Cuts

President of the European Central Bank Christine Lagarde attends a press conference following an informal meeting of the Economic and Financial Affairs Council (ECOFIN) and central bank heads of EU countries in Budapest, Hungary, Friday, Sept. 13, 2024. (Tibor Illyes/MTI via AP)
President of the European Central Bank Christine Lagarde attends a press conference following an informal meeting of the Economic and Financial Affairs Council (ECOFIN) and central bank heads of EU countries in Budapest, Hungary, Friday, Sept. 13, 2024. (Tibor Illyes/MTI via AP)
TT

ECB's Lagarde Rejects 'Political Pressure' after Italy Seeks Bigger Rate Cuts

President of the European Central Bank Christine Lagarde attends a press conference following an informal meeting of the Economic and Financial Affairs Council (ECOFIN) and central bank heads of EU countries in Budapest, Hungary, Friday, Sept. 13, 2024. (Tibor Illyes/MTI via AP)
President of the European Central Bank Christine Lagarde attends a press conference following an informal meeting of the Economic and Financial Affairs Council (ECOFIN) and central bank heads of EU countries in Budapest, Hungary, Friday, Sept. 13, 2024. (Tibor Illyes/MTI via AP)

The European Central Bank (ECB) is an independent institution not subject to any political pressure, its President Christine Lagarde said on Friday, rebuffing Italian calls for bigger interest rate cuts.

Two Italian government ministers had criticized the ECB on Thursday as the Frankfurt-based euro zone central bank cut its deposit rate by 25 basis points to 3.50%, and accused it of a lack of courage.

"The European Central Bank is an independent institution, it's very clearly stated in the treaties," Lagarde said at an informal meeting of EU economy ministers in Budapest.
"We are not subject to political pressure of any sort," she added, according to Reuters.
Italy, with the highest borrowing costs in the euro zone and the bloc's second highest public debt as a proportion of national output, has much to gain from a steep fall in ECB rates.
Foreign Minister Antonio Tajani, one of the members of Prime Minister Giorgia Meloni's government who spoke out against the ECB, also called for the bank's founding treaty to be reformed.
"Today the European Central Bank is only concerned with fighting inflation, (but) it is not enough, we need a central bank that can manage the currency to promote growth," Tajani said.
Speaking on Thursday, Lagarde suggested to reporters that the bar for another cut next month was relatively high, highlighting that policymakers would be unlikely to have enough data to determine whether further easing was appropriate.



Gold Extends Fall to Sixth Day ahead of Fed, US Inflation Data

A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
TT

Gold Extends Fall to Sixth Day ahead of Fed, US Inflation Data

A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)

Gold extended losses for a sixth straight session on Wednesday to hover near the two-week lows hit the day before on lowered expectations of deeper rate cuts, as traders turned their focus to the Federal Reserve's meeting minutes and inflation data.

Spot gold fell about 0.2% to $2,617.79 per ounce by 1145 GMT, having touched its lowest level since Sept. 20 on Tuesday. US gold futures for December delivery was steady at $2,636.20.

"The precious metals sector seems somewhat disappointed after yesterday's meeting by China's National Development and Reform Commission, which reignited concerns about growth and demand from China in Q4. Also, gold is confronting the possibility of less aggressive rate cuts," Zain Vawda, market analyst at MarketPulse by OANDA, said, Reuters reported.

Non-yielding bullion is considered a safe investment and thrives in a low interest rate environment.

China is the world's largest consumer of gold, although record high prices and worries about economy have dampened consumer sentiment. A rebound in gold prices to a record peak also dashed the Indian bullion industry's expectations of a lucrative festival season.

Even after the losses, gold prices are set for an over 25% rise this year after prices hit a record peak of $2,685.42 on Sept. 26.

"The market is currently awaiting the upcoming inflation data for US. Since last week's payroll data, the market is discussing if we are in soft landing or no landing scenario," UBS analyst Giovanni Staunovo said.

The minutes from Fed's September policy meeting are due at 1800 GMT, while the US Consumer Price Index (CPI) and Producer Price Index (PPI) data is due on Thursday and Friday, respectively.

"A significant rise in inflation could alter the scenario. However, considering the geopolitical situation and market uncertainties, we might continue to see range-bound trading with limited downside rallies," said Vawda.

In other metals, spot silver steadied at $30.69 per ounce. Platinum held steady at $949.70 and palladium fell 1% to $1,011.51.