ECB Press Conference: Lagarde speaks on outlook after leaving key rates unchanged

As Christine Lagarde, President of the European Central Bank (ECB), addresses the media regarding the ECB’s decision to maintain key interest rates unchanged in March, she emphasizes the rationale behind the decision and responds to queries from the press.

Lagarde begins by outlining the ECB’s assessment of the current economic landscape, highlighting factors such as inflation trends, employment figures, and overall economic stability. She underscores the importance of data-driven decision-making in determining monetary policy actions.

Key quotes

“There are signs that growth in wages is starting to moderate.”

“Inflation is expected to continue the downward trend in coming months.” 

“Longer-term inflation expectations broadly stable around 2%.”

“Risks to economic growth remain tilted to the downside.”

“We’re making progress in disinflationary process.”

“Surveys point to a gradual recovery over the course of this year.”

“Impact of past rate increases will gradually fade.” 

“Demand for labour is slowing.”

“Domestic price pressures are elevated.”

“Particularly vigilant about wages and profits.”

“Only underlying indicator that isn’t declining is domestic inflation.”

“We will not wait until we are at 2% to make a decision.”

“Market expectations seem to be converging better.”

“We discussed framework, my strong expectation is that it will be completed on March 13.”

“We’re making progress in disinflationary process.”

“We’re more confident about hitting goal, but not sufficiently confident.”

“Data will come in next few months, we will know a lot more in June.”

“We’re seeing general moderation in underlying inflation.”

“It’s clearly a positive signal but not enough yet.”

“Broad agreement we won’t change view on single data point.”

“Data directionally good but not strong or durable enough.”

Key takeaways from ECB policy statement

• “ECB intends to continue to reinvest, in full, principal payments from maturing securities purchased under PEPP during the first half of 2024.”
• “APP and Pandemic Emergency Purchase Programme (PEPP) APP portfolio is declining at a measured and predictable pace, as Eurosystem no longer reinvests principal payments from maturing securities.”
• “Future decisions will ensure that policy rates will be set at sufficiently restrictive levels for as long as necessary.”
• “Financing conditions are restrictive and past interest rate increases continue to weigh on demand, which is helping push down inflation.”
• “Based on the current assessment, ECB considers that interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal.”
• “Over the second half of the year, ECB intends to reduce the PEPP portfolio by €7.5 billion per month on average.”
• “In particular, ECB’s interest rate decisions will be based on its assessment of inflation outlook in light of incoming economic and financial data, dynamics of underlying inflation, and strength of monetary policy transmission.”

to be updated …