By Marta Vilar – WASHINGTON (Econostream) – European Central Bank President Christine Lagarde said on Tuesday that the ECB had no tightening bias but should be “agile” and “ready” to move in any direction.

In an interview with Bloomberg TV, Lagarde said that the current situation arising from the Middle East war was somewhere between the ECB’s baseline and its adverse scenario.

“[W]e have to look at the price of the barrel, the price of the various categories of fuel, the price of futures, and all of that applied to gas as well to determine where we are exactly relative to these two,” she said. “But we are somewhere in between the baseline and the adverse scenario.”

Lagarde added that this changed “every day” and that the difficulty for central bankers lied in having to take a medium-term view.

“This price stability that defines our mandate is done to reference to the medium term results, and at the same time facts, data, number of ships blocked here, volume of oil extracted, varies almost on a daily basis,” she said. “So we need to do this somehow schizophrenic exercise of keeping our eyes on the medium term and making sure that we deliver on our mandate but at the same time checking the data almost daily.”

Asked what this meant for monetary policy, Lagarde said the ECB would “have to be completely agile and ready to move in the direction that is required,” adding that it should also be data-dependent.

“But it does not predicate as we speak today ... that we will go in one direction or the other and it certainly doesn’t determine a rate path that I can confirm today,” she said. “And any of the colleagues who are confident that it is going to be one way or the other don’t know, honestly. But don’t forget one thing: the baseline and all our scenarios are designed and formulated with the incorporation of what the market assumes and no other monetary policy or fiscal policy decision affecting baseline or either of the two scenarios.”

Asked whether there was a tightening bias at the ECB, Lagarde answered: “No, I think there's, we have a compass which indicates price stability predicated on financial stability. Those are the two. I wouldn't call them bias.”

She reiterated that the ECB “would need data to act,” but “we would not hesitate to act.”

“We need the data in order to analyze whether it’s a see-through, it’s going to be short-lived, we will get back to the past, if you will. Although I don’t think that’s actually possible. And we need all that. So it’s either the see-through, which doesn’t require that we take any particular decision or its going to be long-lasting, it will peak higher and it will require action on our part, or it will be somewhere in between which will then require judgement on the part of the Governing Council to decide whether or not the indirect effect and the risk of secondary effect might deanchor expectations,” she said.

The ECB would need to carefully assess which scenario best reflected the current situation “to make sure that inflation expectations are anchored and we do not get the secondary effect, so that’s the job,” she said.