ECB’s Lagarde: 3Q Asset Purchases to Be Data-Dependent and Reflect the Outlook

15 March 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Tuesday reiterated key points made following last week’s monetary policy meeting of the Governing Council, highlighting the ECB’s data-dependence and the gradualist approach to interest rates.

Speaking at a conference in Berlin, Lagarde said that the ECB’s baseline scenario implied that despite the impact of the war, ‘the economy should still grow robustly in 2022 thanks to the declining impact of the pandemic and the prospect of solid domestic demand and strong labour markets.’

In all scenarios considered by the ECB, inflation would decline gradually to stabilise around the ECB’s 2% target in 2024, she said.

Asset purchases in 3Q ‘will be data-dependent and reflect our evolving assessment of the outlook’, she said.

‘If the incoming data support the expectation that the medium-term inflation outlook will not weaken even after the end of net purchases, we will conclude net purchases in the third quarter’, she said. ‘But if the medium-term inflation outlook changes and if financing conditions become inconsistent with further progress towards our 2% target, we stand ready to revise our schedule for net purchases in terms of size and/or duration.’

‘Any adjustments to interest rates will take place some time after the end of our net purchases and will be gradual’, she continued. ‘The path for interest rates will continue to be determined by our forward guidance and by our strategic commitment to stabilise inflation at 2% over the medium term.’