Central banker Christine Lagarde needs to point to a steady unwinding of restrictive interest rates
European Central Bank chief Christine Lagarde holds press conference to discuss monetary policy and answer questions
European Central Bank President Christine Lagarde Speaks At The 2023 Conference On Monetary Policy
ECB President Christine Lagarde explains the Governing Council's monetary policy decisions and will answer questions from journalists at the Governing Council press conference to be held on 14 September 2023 at 14:45 CET in Frankfurt am Main.
Christine Lagarde said in the medium-term a combination of higher investment needs and greater supply constraints is likely to lead to stronger price pressures
"We are deliberately data dependent, we have an open mind as to what the decisions will be in September and in subsequent meetings," she told a press conference after the ECB implemented its latest rate hike.
The central bank's ninth straight increase took the closely-watched deposit rate to 3.75 percent -- a level last seen in May 2001 and equal to its previous record high.
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"Inflation has been coming down but is projected to remain too high for too long," ECB president Christine Lagarde said.
The boost of a quarter-percentage point, to 3.5 percent, is the eighth straight increase since July 2022 for the 20 countries that use the euro currency.
The European Central Bank is scheduled to present new economic forecasts after the next rate decision, though Lagarde wouldn’t be drawn on details.
Lagarde’s 2019 appointment to lead the ECB was a landmark event in improving gender diversity in economic policymaking, though she remains in the minority — both in her own institution and internationally.
With counterparts from the US to the UK sending out signals of waning aggression after drastic monetary tightening, euro-zone officials insist their own onslaught against inflation isn’t about to let up.
Inflation in the euro zone hit a record 10.6 percent on an annualised basis last month, but economists polled by Reuters expect it to edge down to 10.4 percent in a flash reading for November due to be published this week
The ECB president is set to raise rates to curb inflation just as war and energy prices threaten to tip the eurozone into recession
Speaking at a panel at the ECB Forum in Sintra, Portugal, alongside U.S. Federal Reserve Chairman Jerome Powell and Bank of England Governor Andrew Bailey, Lagarde added that central banks need to adjust to significantly higher price growth expectations.
The comment is the clearest sign yet from Lagarde that the ECB is ready to move on rates soon rather later, as the institution trails behind the US Federal Reserve and other major central banks that have already taken the step to combat inflation.
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With price growth in the euro zone at a record high even before Moscow began its assault on Feb. 24, policymakers were already pushing for a quicker exit from its asset purchases, opening the way for an interest rate hike late this year.
The ECB's conditions for increasing interest rates were "not satisfied and certainly not in the near future", Lagarde said, pushing back against market expectations that a hike could come as early as 2022.
ECB stress tests will gauge "how extreme weather events would affect banks" and how their business would be affected by a "sharp" rise in the price of carbon as a result of new environmental rules.
The ECB’s approach has seen some notable changes, which is clear from the governing council’s detailed description of how it understands the economy and the role of monetary policy
"We believe that the steady hand is actually the right response," ECB President Christine Lagarde told a news conference, stressing that tapering, exiting or transitioning away from the 1.85 trillion euro Pandemic Emergency Purchase Programme had not even been discussed.
Lagarde stressed the overall situation was still 'clouded with uncertainty', however, due to factors ranging from the possible spread of new virus variants to risks to financing conditions and continued pressures on struggling sectors of the economy.
The selloff has even engulfed Europe, despite its lagging recovery and weak inflation, with Germany posting a 26 bps real 10-year yield increase last week -- the biggest in almost a year.