The European Central Bank ( ) was strongly criticised two years ago for failing to predict its ejection – first known for the data in the euro era – thus delaying the tightening of monetary policy and limiting price increases. The ECB first increased interest rates in July 2022, when inflation in the Eurozone had already reached 8.6%, more than four times its own 2% target. Central bank president Christine Lagarde then invoked that it was not possible to predict the Russian invasion of Ukraine that led to the explosive increase in energy prices and certain food prices. However, inflation had raised a head before the war in Ukraine, mainly because of the problems in supply chains caused by the coronavirus pandemic, with the offer being unable to satisfy the sharp rise in demand after opening economies. In January 2022, inflation in the Eurozone was “running” at an annual rate of 5.1% and was on an upward trajectory. From July 2022 the ECB went 10 interest rate reductions by September 2023 to reduce inflation, which has achieved a significant degree, with the help of other factors, particularly the deescalation of energy prices. From June he began the monetary policy relaxation cycle, moving on to the first interest rate reduction by 25 basis points, with the deposit rate falling to 3.75% from 4%. Meanwhile, ECB experts’ forecasts have been adapted to the new data and their reliability has increased. Lagarde said last month that because of this credibility there is greater confidence in the provision of ECB officials that inflation in the Eurozone will achieve the 2% target in the second half of 2025. Thursday, when asked again, he appeared less categorical. In any case, predictions are predictions and cannot be satisfied with them. To the extent that the provision of ECB inflation services, updated every three months, will be confirmed by the latest data, interest rate reductions will continue. On Thursday (18.7.2024), the ECB kept interest rates unchanged, but this was something that had been marked by the previous meeting, logically taking sufficient time to confirm the ECB’s forecasts. In other words, a debate on a new reduction in interest rates will take place at the September meeting, when the figures on inflation in July and August are available, but also new data on its key determinants, such as wage increases, business profit margins and labour productivity. Lagarde said that the September decision is very open and will depend on the course of the above elements. If these are consistent with the provision for the return of inflation to 2% a new reduction should be expected, If not, then the ECB will not reduce interest rates until the figures confirm that inflation is moving towards the target. Of the determining factors of inflation, positive for its return to the target is to reduce the profit margin of enterprises in the first quarter of 2024 after two years of significant growth. This development, as a result, does not pass on to prices the whole rate of wage growth moving between 4% and 5% on average, but part of them being absorbed by profits. Profits, which were significantly responsible for ejecting inflation in 2022, now seem to help reduce it. Another factor that enters the equation for reducing inflation is labour productivity. If this increased, it would also contain upward pressure on prices, but for now its improvement is very small. Hopes are, however, that increasing demand could significantly improve.