Profound shifts in the world economy could make inflation volatile for years to come, complicating efforts to control prices, but sticking with inflation-targeting regimes is still the best option, European Central Bank President Christine Lagarde said on Friday.

The European Central Bank must think hard about how it deals with risks and uncertainty in an era of more-volatile inflation and less clarity about monetary-policy transmission, President Christine Lagarde said.

The European Central Bank is expected to cut interest rates again this week as inflation drifts back down towards its two-percent target, but policymakers will likely stay tight-lipped on future moves.

The European Central Bank cut its interest rates on Thursday, saying lower inflation and economic growth were allowing it to take its foot off the brake slightly.

European Central Bank policymakers must remain on alert even with consumer-price growth on track to slow to 2% by the end of next year, Bundesbank President Joachim Nagel said.

The European Central Bank is projected to cut interest rates again, as investors scrutinize its statements for indications of further easing. Despite a sluggish euro zone economy, persistent inflation risks continue.

The European Central Bank's rate cutting cycle could accelerate over coming months, governing council member Fabio Panetta said on Thursday. The ECB last week cut its key interest rates by 25 basis points after a similar move in June,

ECB President Christine Lagarde praised the "remarkable" unwinding of inflation with minimal job losses, projecting inflation to hit target by 2025. However, she warned that significant uncertainties remain.