Lagarde: No Tradeoff Between Price And Financial Stability

Q: Is there a conflict between price stability and financial stability? To what extent do you consider slowing the pace of rate hikes because of financial stability? Were you surprised by the financial problems we now see in the US and those previously with pension funds in the UK? Is this something that was expected?

• A1: I believe there is no trade off between price and financial stability. We are demonstrating this with this decision. Raising rates 50bp addresses price stability and, separate from that, we are monitoring market tensions and stand ready to provide other facilities if needed. We can do more if necessary. We have demonstrated this during the time of PEPP. Euro liquidity is perfectly addressed.
• A1 (VP Guindos): European banks are resilient. Capital is higher than 10-15 years ago. The liquidity position is robust. The composition of liquidity buffers is strong with high quality assets. Improvements in profitability more than offsets losses in fixed income portfolios. Exposures to Credit Suisse are quite limited and there is limited concentration of exposure risk.