ECB’s Lagarde: Decisive Action Has Been Paramount to Get Inflation Down

4 September 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Monday said that in the high-inflation environment of the last two years, decisive action by monetary policy has been crucial.

In a speech on central bank communication at a seminar in London, Lagarde called the inflation of the last two years 'unique' and said that ‘[i]n this setting, it is paramount not only to take decisive action to bring inflation down, but also to communicate effectively to ensure that medium-term inflation expectations remain anchored during the process.’

Credible reassurances that price stability would be restored have been more essential than event to ward off an inflation spiral, she said, given that much of the high inflation has had to do with goods to whose prices consumers were particularly attentive.

‘The current environment presents central banks with both a risk and an opportunity: people are now paying more attention to inflation, which may increase the risk of a de-anchoring of inflation expectations; but because of that higher attention, they may be more willing to listen to us, which gives us a valuable window of time to deliver our key messages’, she said.