Lagarde: Economic Activity Is Slowing

Pres Lagarde begins the ECB press conference with an opening statement - first reading the statement almost verbatim, then discussing the economic circumstances surrounding the decision:

• Economic activity is slowing. Russia’s unjustified aggression towards Ukraine is an ongoing drag on growth. The impact of inflation on purchasing power, supply constraints and higher uncertainty are having a dampening effect on the economy. Firms continue to face higher costs and disruptions to their supply chains, although there are tentative signs of some supply chain problems improving. These factors are clouding the outlook for H222 and beyond.
• The re-opening of the economy is supporting spending in the services sector. Consumption is being supported by the savings that households built up during the pandemic and from a strong labour market. Fiscal policy is helping to ease the impact of the war in Ukraine. Fiscal policies in all countries should aim at raising the growth potential and supporting debt sustainability.