Lagarde: Holistic View Of Inflation For Future Cut

Q: Would tighter fiscal policy in the eurozone offer a reason for the ECB to accelerate future rate cuts?

• A: In the press statement we indicate that governments should continue to roll back energy related fiscal measures so that disinflation can continue sustainably.

Q: Services inflation is still sticky. Could the ECB still go ahead with a cut in June if service inflation stays at 4%? Can you give insight on the GC discussion around the balance of risks with respect to inflation?

• A: We are not going to wait until everything goes back to 2%. Its inevitable that some items will be slightly higher. We will look at all prices and will decide on that assessment whether we are confident enough.
• I know a few GC members who are keen on the balance of risks in relation to inflation. But, we have tried to steer away from this. What we prefer to do as a matter of principle is to identify those components that pose an upside risk and those that pose a downside risk. When you look at the level of uncertainty, this is the right approach.