Lagarde: Nature Of Eurozone Inflation Different From US

Q: What makes you think that the eurozone can diverge from the US where inflation rates are refusing to fall further? Is your confidence about the condition being met in June lower than it was a month ago, or is it intact?

• A: Most of what I said in the ECB and the Watchers speech 10 days ago still holds today.
• Our objective is price stability and we must determine our monetary policy decisions on the basis of the data that are produced by the euro area, and the global environment (including the US, China, Japan and emerging markets).
• But we focus predominantly on the territory where we have responsibility for monetary policy. The nature of inflation in the euro area was different than in the US. The drivers were different, the fiscal response different, investments were different etc.
• We cannot draw conclusions that US and eurozone inflation are the same. We take into account what happens in the US, but we don’t assume it will be a mirror for the euro area.