Lagarde: Haven't Finished Normalising, Deliberately Did Not Discuss QT

The Q&A with Pres Lagarde begins. The first question: Are you comfortable with the expectations that interest rate steps will slow after today and peak somewhere around 3% next year? Since we are at the lower end of the neutral range estimates, could the ECB be ready in December to unveil a plan for reducing the balance sheet?

• A: We are making more progress in withdrawing accommodative support to demand. Have we completed the job and finished the normalisation of monetary policy? No. There is still ground to cover.
• We will decide the future path and pace of our rate increases on the basis of the data we have and we will do so meeting-by-meeting. We are deliberately turning our back to forward guidance. We will look at the inflation outlook which takes into the account the evolution of the economy which includes the higher likelihood of a recession. We also take into account the measures we have taken so far. We will be attentive to the transmission lag of monetary policy.
• The reduction of our APP portfolio is a matter that we discussed at our latest retreat. We did not discuss the substantive issues today. Deliberately. We decided that we would pursue that discussion and decide the key principles of the reduction of the APP in December.