(Finance) – “We remain committed to maintaining our price stability mandate, as we have done for the past 20 years. Our target is a medium-term inflation rate of 2%. To achieve this, we will act at the right time“. This was stated by the president of the European Central Bank (ECB), Christine Lagarde, speaking at the plenary of the European Parliament in Strasbourg. “In all our communication, we must be open about what we can and cannot do as a central bank. For example, our monetary policy cannot fill pipelines with gas, eliminate arrears in ports or train more truckers, “he said in another key passage of his speech.
Lagarde recalled that the growth quarterly of the Eurozone has slowed down to 0.3% in the last quarter of 2021, which still allowed GDP to recover to pre-pandemic level despite the rapid spread of the Omicron variant. Furthermore, inflation has increased significantly in recent months and further surprised to the upside in January, with the year-on-year rate rising to 5.1% from 5% in December. “IS inflation is likely to remain high in the short term – underlined the president of the ECB – Energy prices continue to be the main reason for the high rate of inflation “.
The Frankfurt institution continues to “consider the risks to the economic outlook broadly balanced over the medium term. The uncertainties related to the pandemic have eased slightly. At the same time, the geopolitical tensions have increased and persistently high energy costs could put a stronger than expected drag on consumption and investment. The pace at which supply bottlenecks are resolved poses an additional risk to the growth and inflation outlook. Compared to our December expectations, the risks to the inflation outlook are on the upside, particularly in the short term“.
Lagarde reiterated that “there will be no rate hike before the end of our net asset purchases”. “In addition, there are three conditions that will need to be met before the Governing Council feels sufficiently confident that a slope of our benchmark rate is appropriate,” he added. “All three conditions are intended as safeguards against a premature rate hike. of interest. Finally, any adjustments to our policy will be gradual“.