Lagarde: "Intend" To Hike 50bp In March, But Still Ground To Cover

Q: Can you tell us about the nature of the debate for today’s decision? Provide more clarity on what you mean by the policy rate path after March.

• A: I would characterise the discussion as showing continuity and consistency. Continuity because we were clear in December than in all reasonable scenarios significant rate increases would be need to bring inflation back to the medium term 2% inflation target in a timely manner. This would require rates to rise to sufficiently restrictive levels and that rate increase would happen at a steady state.
• Where we have consistency is with respect to the communication we have had in December and communication that I have expressed ever since. We reached this in a very large consensus today i.e. that it should be 50bp and it is intended to be 50bp in March.
• Does it mean we have reached the peak in March? No. We have ground to cover. As we received projections, we will need to assess what rates, what level, and what pace will be needed to ‘stay the course’. We need to raise rates into restrictive levels and stay there for sufficiently long so that we are confident that we will deliver the 2% inflation objective.
• Where there was discussion but not full agreement is the manner in which we communicate the decision [regarding hiking 50bp in February and March].