(Bloomberg) -- The European Central Bank is closing in on a reduction in interest rates as long as shocks don’t derail the slowdown in euro-zone inflation, according to President Christine Lagarde.

Lagarde told CNBC on Tuesday that officials in Frankfurt are “observing a disinflationary process” that’s currently in line with expectations and should sustainably return consumer-price growth to 2% by mid-2025.

“If we don’t have a major shock in developments, we are heading towards a moment where we have to moderate the restrictive monetary policy that we have,” she said. That is likely to happen in “reasonably short order,” Lagarde said, without elaborating.

The remarks come just five days after the ECB bolstered expectations that interest rates will be cut in June as inflation recedes. That would be the first reduction since officials ramped up borrowing costs to tackle runaway prices and — with the US economy still running hot — is likely to precede any such step by the Federal Reserve.

Growth in the 20-nation euro zone, by contrast, has been at a near standstill for more than a year, helping to tame the spike in prices that followed Russia’s invasion of Ukraine. Officials in Frankfurt are increasing confident of hitting their 2% inflation target in the coming months as tight policy crimps lending and wage gains abate.

Speaking earlier Tuesday, Irish central bank chief Gabriel Makhlouf and his Finnish counterpart Olli Rehn reiterated that June will probably see rates lowered. But while Greece’s Yannis Stournaras backs four quarter-point cuts in the deposit rate this year from its current record of 4%, many are more cautious due to geopolitical uncertainty.

Going into last week’s meeting, economists surveyed by Bloomberg anticipated three moves of that size in 2024 — a similar outlook to bets in money markets.

Lagarde wouldn’t comment on how many cuts in borrowing costs are likely to materialize in the coming months, drawing attention to a “succession of geopolitical developments” that have dented consumer confidence and roiled commodities markets.

Despite the “relatively moderate” reaction in energy prices in the wake of Iran’s attack on Israel, she remains cautious, noting that inflation’s journey back to the target will be a “bumpy road.”

“We are not pre-committing to any rate path — we are data-dependent,” she said. “We apply judgment at the end of the day.”

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