Lagarde says ECB will cut rates soon, barring any major surprises; notes 'extremely attentive' to oil

European Central Bank President Christine Lagarde on Tuesday said the central bank remains on course to cut interest rates in the near term, subject to any major shocks.

Lagarde said the ECB would monitor oil prices "very closely" amid elevated fears of a spillover conflict in the Middle East. However, since Iran's unprecedented air attack on Israel over the weekend, she said the oil price reaction had been "relatively moderate."

Her comments come shortly after the central bank gave its clearest indication to date that it could start cutting interest rates during its June meeting.

"We are observing a disinflationary process that is moving according to our expectations," Lagarde told CNBC's Sara Eisen on the sidelines of the IMF Spring Meetings.

"We just need to build a bit more confidence in this disinflationary process but if it moves according to our expectations, if we don't have a major shock in development, we are heading towards a moment where we have to moderate the restrictive monetary policy," Lagarde said.

"As I said, subject to no development of additional shock, it will be time to moderate the restrictive monetary policy in reasonably short order," she added.

The ECB on Thursday held interest rates steady at a record high for the fifth consecutive meeting, but signaled that cooling inflation means it could begin trimming soon.

In a shift from previous language, the ECB said "it would be appropriate" to lower its 4% deposit rate if underlying price pressures and the impact of previous rate hikes were to boost confidence that inflation is falling back toward its 2% target "in a sustained manner."

The central bank had previously made no direct reference to loosening monetary policy in its prior communiques.

Asked whether