HIGHLIGHTS-Lagarde comments at ECB press conference

ECB-POLICY-HIGHLIGHTS:Lagarde comments at ECB press conference
ECB-POLICY-HIGHLIGHTS:Lagarde comments at ECB press conference Copyright Thomson Reuters 2023
By Reuters
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FRANKFURT, Feb 2 – The European Central Bank raisedinterest rates again on Thursday and pencilled in at least onemore hike of the same magnitude next month.

Following are highlights of ECB President ChristineLagarde’s comments at a news conference after the policymeeting.

NO SYMMETRY OF RISK

“We don’t think that there is symmetry of risk, but it is more balanced than it was back in December for sure.”

ON COREINFLATION

“This is the highest in all the time that core inflation hasbeen in our part of the world. So I get it, headline inflationhas gone down … but underlying inflation pressure is there,alive and kicking, which is why we are committing as we intendin this monetary policy statement, and this is why I say we havemore ground to cover and we are not done.”

DETERMINATION ON INFLATIONTARGET

“Our determination to reach 2% medium-term should not bedoubted.”

MEANING OF ‘INTENTION’

“Meeting by meeting is going to be applied on the basis ofdata, but when we have data that is sufficiently strong and whenwe are sufficiently far away from what we expect will be theappropriate rate to reach the 2%, it is completely legitimate toexpress an intention in a forceful way.

“An intention is not a 100% commitment but it is a prettystrong determination … I cannot think of scenarios – unlessthey were quite extreme – where that would not happen.”

GENERALAGREEMENT ON HIKES

“There was general agreement on the fact that the 50 basispoints this time around and the 50 basis points in March werelegitimate on the basis of, particularly in March, of theunderlying inflation pressure that we know will continue. Ithink where there was discussion, and not full agreement, was onthe way in which we communicate it.”

VERYLARGECONSENSUS

“On the overall monetary policy statement that reflects ourdiscussions and our decision, there was a very, very largeconsensus.”

‘GROUND TO COVER

“We know that we have ground to cover. We know that we arenot done. What we are saying is that as we receive projections,we will need to assess what rates, what level, what pace will beneeded in order to raise (interest rates) significantly into toorestrictive levels and to stay there for sufficiently long sothat we are confident that at those rates we will actuallydeliver the 2% objective medium term that we have set forourselves.”

CONTINUITYANDCONSISTENCY

“The expression ‘we shall stay the course’ or ‘the GoverningCouncil will stay the course’ is a good way to express thatdouble principle of continuity and consistency.”

‘INTEND’ TO RAISERATES

“We intend – which is a strong word – it is not an absoluteirrevocable unconditional commitment but it is a strong word. Weintend to raise by 50 basis points.”

INFLATIONOUTLOOKRISKS

“The risks to the inflation outlook have become morebalanced.”

FUTUREPRICEPRESSURES

“A further weakening of demand would also contribute tolower price pressures than currently anticipated, especiallyover the medium term.”

CONTINUEDMONITORING OF INFLATION

“Most measures of longer-term inflation expectationscurrently stand at around 2%, but these warrant continuedmonitoring.”

PENT-UP DEMAND

“Although supply bottlenecks are gradually easing, theirdelayed effects are still pushing up goods price inflation. Andthe same holds true for the lifting of pandemic-relatedrestrictions. While weakening, the effect of pent-up demand isstill driving up prices, especially in the services sector.”

STRONGPRICEPRESSURES

“Price pressures remain strong, partly because high energycosts are spreading throughout the economy.”

UNDERLYINGINFLATION

“Other indicators of underlying inflation are also stillhigh.”

ECONOMICOUTLOOK

“The risks to the outlook for economic growth have becomemore balanced.”

ENERGYPRICES

“Market-based indicators suggest that energy prices over thecoming years will be significantly lower than expected at thetime of our last meeting.”

ROLLINGBACKGOVTSUPPORT

“As the energy crisis becomes less acute, it is important tonow start rolling these measures back promptly in line with thefall in energy prices and in a concerted manner. Any suchmeasures falling short of these principles are likely to driveup medium-term inflationary pressures, which would call for astronger monetary policy response.”

RESILIENTECONOMY

“Overall, the economy has proved more resilient thanexpected and should recover over the coming quarters.”

BOTTLENECKSEASING

“Supply bottlenecks are gradually easing. The supply of gashas become more secure, firms are still working off large orderbacklogs, and confidence is improving.

“Moreover, output in the services sector has been holdingup, supported by continuing reopening effects and strongerdemand for leisure activities.”

HEADWINDS

“Subdued global activity and high geopolitical uncertainty,especially owing to Russia’s unjustified war against Ukraine andits people, continue to act as headwinds to euro area growth.Together with high inflation and tighter financing conditions,these headwinds dampen spending and production, especially inthe manufacturing sector.”

WEAKGROWTH

“Economic activity has slowed markedly since mid-2022 and weexpect it to stay weak in the near term.”

(Reuters Global News Desk) ((Susan.fenton@thomsonreuters.com)) nL1N34I182

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