(Finance) – The President of the ECB, Christine Lagardestated that, given our current forecasts on interest rates, “we are at a level where we believe, if held long enough, will get us to the 2% inflation target over the medium term.” In a interview broadcast live with the Financial Times, Lagarde insisted that “long enough means long enough” and more specifically “in the next two quarters we will not see changes” on the rate line and in the longer term “will depend on the criteria we indicate”.
In the euro area “inflation has fallen massively” in the last year: “in October a year ago it was at 10.6%, now it is at 2.9%: it is a serious change”, he then underlined , explaining that much of this decline also has to do with the decline in energy prices. “We really have to to monitor what energy prices do later. If it remained relatively flat we would lose thebasic effect so we should not assume that this 2.9% as something that should be taken for granted for a long time, they could be there recrudescences“he warned.
Lagarde then said that the European Central Bank is not actively selling government bonds and has not made any decisions to this effect, while he limits himself to not renewing those that expire in his wallet. For what concern purchasing plan launched during the Covid crisis (Pepp) “for the moment we continue to reinvest” the securities that mature. The discussion on the reduction of the PEPP amount “will take place in the future”, she added.
The ECB president then said that she was not comfortable with the fact that European Union governments have not yet managed to agree on a new framework of rules on management of public accountswith the reform of Stability and Growth Pact, while “a European fiscal governance framework is of crucial importance, given that we do not have a fiscal union but a monetary union”. “For ours too politics monetary – he explained – we must understand with which parameters the Finance Ministers will decide their budgets and manage their positions to reduce their deficit when necessary”. Lagarde nevertheless expressed appreciation for the work completed at the end Ecofin and for the commitment that two key countries, France and Germany, are carrying out on this negotiation.
Finally he commented on the EU Commission’s decision to entrust a Mario Dragons the task of drawing up a study on the future of competitiveness in the European Union. “I think it’s great that someone with the intellectual caliber of Mario Draghi is focusing on these issues and we will help him in any way we can if he asks our economists for help.” I think that this task “requires going truly in-depth into granular, sectoral analyses, to identify those areas in which Europe has lagged behind – he added –. The issue concerns us because it involves the productivity and has an impact on inflation And wagesfactors to which we are attentive”.