The European Central Bank (ECB) doesn’t yet have sufficient evidence that inflation threats have passed, president Christine Lagarde and her top economist said - feeding expectations that officials will take a break from cutting interest rates this month.

With the eurozone job market robust, the ECB has time to assess incoming information, Lagarde said Monday in Sintra, Portugal, where she opened the ECB’s annual central-banking forum. Speaking on Tuesday to Bloomberg TV, chief economist Philip Lane said June’s inflation reading won’t be enough to fully evaluate closely watched services prices.

“We are still facing several uncertainties regarding future inflation, especially in terms of how the nexus of profits, wages and productivity will evolve and whether the economy will be hit by new supply-side shocks,” Lagarde said. “It will take time for us to gather sufficient data to be certain that the risks of above-target inflation have passed.”

The remarks suggest a preference for keeping borrowing costs unchanged when the ECB meets later this month. Since June’s initial cut, investors have been looking to Lagarde for indications of how quickly rates will be lowered - and whether the political drama in her homeland will sway monetary policy in any way.

Monday’s speech doesn’t mention France - nor does it offer specific guidance on the ECB’s path ahead, with Lagarde reiterating her commitment to making decisions as data arrive.

“The strong labour market means that we can take time to gather new information, but we also need to be mindful of the fact that the growth outlook remains uncertain,” she said. “All of this underpins our determination to be data-dependent and to take our policy decisions meeting by meeting.”

Lagarde said officials’ assessment of the inflation outlook is “informed by, but not limited to, our projections” - pushing back against speculation among analysts that the ECB will only consider changing rates at the quarterly meetings when new forecasts are available. 

She also stressed that policymakers won’t be thrown off course by any one particular piece of information, having highlighted in the past that the road back to 2% will be bumpy and may include temporary setbacks.

“While the flow of new information constantly adds to and improves our picture of medium-term inflation, we are not pushed around by any specific data point,” Lagarde said. “Data dependence does not mean data-point dependence.”

On Tuesday, policymakers will receive an update on price pressures across the eurozone in June. That may show some small progress towards the 2% target, with economists estimating consumer-price growth moderated to 2.5% from 2.6%.

Against that backdrop, markets are betting on one or two more cuts this year - a scenario that Finland’s Olli Rehn has described as “reasonable,” though he, too, said officials can’t commit to a certain path.

The Bank for International Settlements warned on Sunday that central banks should be cautious in lowering rates too rapidly, to avoid inflation flaring up again.

Lagarde agrees. 

“Our work is not done,” she said. “We need to remain vigilant.”

  - Bloomberg