Reply To: ECB Raises Key Rates 50 bps vs 25 bps Expected Approves Transmission Protection Instrument


Lagarde Q&A:

If necessary, we can deploy new instruments to tackle fragmentation
Decision was ‘unanimously approved’
Says July and Sept will be ‘first steps’
We have a sequence in place and want to be predictable
Did not discuss neutral rate
A lot of discussions in the past 11 years were about too-low inflation , now we’re in the opposite situation
Three-quarters of our forecasting error is largely attributable to energy prices, much of the rest is due to bottlenecks that lasted longer than anticipated
“we are now on our path to exit negative interest rates soon… it is good practice… to start with an incremental increase that is sizeable and not excessive… we also want to observe how markets will operate”
We are not seeing wages spiraling
We will not tolerate fragmentation that will