ECB’s Lagarde: Monetary Policy Will Take its Course and Normalise

25 March 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Friday said that the ECB was keeping all its options open, but that monetary policy normalisation was coming, depending on the data.

In an interview with CNN International, Lagarde said in the context of the additional element in the form of Russian military aggression against Ukraine, ‘So, uncertainty is what has compounded everything else, which is leading us to keeping all options all the table, continuing the path that we had initiated, but certainly with more humility, more flexibility, and the certainty that we want to constantly revisit our projections and determine our monetary policy accordingly.’

‘[M]onetary policy will take its course, will normalise in the conditional fashion that we’ve identified, will be data-dependent’, she said.

Fiscal policy however ‘is going to have to play a role’, she said, and provide support to ‘those most exposed, most vulnerable to the shock that we are suffering.’

Lagarde described the pre-war position of the euro area as ‘on the cusp of the most spectacular recovery after the most brutal economic shock that we had seen in the century.’

‘Jobs were up, growth was up, incomes were up’, she said. ‘Inflation was up a little bit as well, and we were getting ready to normalise monetary policy. So, it all looked really good, almost too good to be true. And then the war broke out.’