Lagarde speech: Neither committed to raise further nor are we finished with hiking rates
22.03.2023, 08:50

Lagarde speech: Neither committed to raise further nor are we finished with hiking rates

European Central Bank (ECB) President Christine Lagarde reiterated on Wednesday that underlying inflation dynamics in the Eurozone remain strong, as reported by Reuters.

Additional takeaways

"We must and we will bring down inflation to target."

"Times are very uncertain."

"Inflation is still high and uncertainty around its path ahead has increased."

"While more restrictive credit conditions are part of the mechanism by which our tightening ultimately brings inflation back to target, we will make sure that the process will be orderly."

"We are neither committed to raise further nor are we finished with hiking rates."

"If, for example, banks start to apply a larger intermediation wedge – then transmission is stronger."

"Recent tensions have added new downside risks and have made the risk assessment blurrier."

"The greater role today played by sectors that rely on discounted future earnings, such as tech, could also make monetary transmission more powerful."

"We do not see clear evidence that underlying inflation is trending downwards."

"Excess savings and the low pass-through to deposit rates could mean a weaker pass-through to consumption."

"We could see a more prolonged cost-push shock coming from wage growth."

"It is important that our monetary policy works robustly in the restrictive direction and that process is only starting to take effect now."

Market reaction

EUR/USD has gained traction following these comments and was last seen rising 0.13% on the day at 1.0780.

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