Lagarde: Need To Maintain Optionality And Flexibility

Lagarde press conference begins with her prepared comments:

• The euro area economy is continuing to recover and the labour market is improving further. The current pandemic wave means growth will be slower in the first quarter. Shortages of materials and labour continues to hold about output in some industries. High labour costs are hurting incomes and are likely to dampen spending. However, the economy is being impacted less and less by each wave of the pandemic.
• Inflation has risen fast in recent months and surprised higher in January. This is driven in large part by higher energy and food prices. Inflation is likely to remain elevated for longer than previously expected but to decline in the course of this year. The GC therefore confirmed the decisions taken at the December meeting.
• Given the uncertainty, we need to maintain optionality and flexibility in the conduct of monetary policy. The GC stands ready to adjust all instruments as appropriate to ensure that inflation stabilises at 2% of the medium term.