European Central Bank (ECB) President Christine Lagarde reminded on Friday that the “battle against inflation is not yet won”, although she believes restrictive policies are making progress.
Lagarde closed the debate day at the meeting of the heads of various central banks in Jackson Hole, in the United States of America, with a speech in which she recalled the desire of her institution to continue its restrictive policies.
In the current context, for the ECB, this means keeping interest rates at sufficiently restrictive levels “for as long as necessary” to achieve a timely return of inflation to the medium-term target of 2%, he underlined.
The Frenchwoman pointed to the possibility of entering an era of changes in economic relations, which represents a significant challenge for money managers with a stability mandate.
For this reason, and given that central bank policy works with a lag, one cannot wait for the parameters of the new environment to become fully understood before action is taken, even if the effects of the decisions taken only really become apparent. understood after they are implemented. remembered.
For Lagarde, it is important to be clear about the proper role of monetary policy, assuming that price stability is a fundamental pillar of a favorable investment climate, so that “monetary policy does not become a source of uncertainty”.
“This will be critical to keeping inflation expectations firmly anchored, even if there are temporary deviations from our target, as may be the case in an economy more sensitive to shocks,” the ECB president defended.
“There is no existing manual for the situation we face today, so it is our job to create a new one,” Lagarde underlined.
The ECB leader also pointed out that policymaking in an era of change and disruption requires an open mind and a willingness to adapt real-time analytical frameworks to new developments, while central banks provide an anchor for decision-making in the economy and price to guarantee. stability in accordance with their respective mandates.
“And looking to the future, we must remain clear in our objectives, flexible in our analysis and humble in the way we communicate,” he concluded.
The Euribor started to rise significantly from 4 February 2022, after the ECB admitted that it could raise key interest rates due to the rise in inflation in the Eurozone, and the trend was reinforced by the start of Russia’s invasion of Ukraine on 24 February 2022.
The next ECB monetary policy meeting will take place on 14 September.
Source: DN
