By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Monday rejected comparisons between the current environment and the stagflation of the 1970s, saying the ECB would act to prevent inflation from becoming embedded.

Speaking during a panel discussion at the House of the Euro in Brussels, Lagarde said geopolitical conditions and confidence had not “significantly improved in the last few months,” despite a positive development in the Middle East war.

“There will be ups and downs and continuous tactics of negotiations and good news, bad news, hopefully no fake news in that respect,” she said.

The broader point, according to Lagarde, was that geopolitical developments had “considerably changed the environment in which we operate.”

Asked about stagflation, Lagarde said the term was closely associated with the 1970s, but that the current situation differed in important respects.

“I don't think that we are in the 70s situation,” she said.

The labor market was not in the same condition as during that period, while monetary policy was also being conducted differently, she said.

At the time, monetary policy decisions “did not respond to the challenge and as a result did not bring inflation down,” Lagarde said.

“My natural expectations and I hope that of all those who observe how we at the ECB respond is that we will, come what may, take the right decisions in order to avoid inflation and to avoid that inflation gets embedded,” she said.

“Hence, we will not find ourselves in a stagflation situation,” she said.

At the same time, Lagarde said the ECB had changed its projections and continued to see an unfavorable balance of risks.

Risks were “to the downside on GDP” and “to the upside on inflation,” she said.