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Lagarde: Premature To Talk About A Transition From PEPP

ECB

Q: How do you see how the market is interpreting today's message on monetary policy? It is being seen as dovish, do you agree? Could PEPP transition into another programme after March 2022?

  • A: I would not say 'lower for longer'. None of us want to tighten prematurely. We are informed by past experience. It would be premature to talk about a transition from PEPP – this was not part of the debate.
Q: What are you going to do about the recent move in inflation away from target – is a more forceful response required? Should we be looking at the second year of the inflation forecasts rather than the first?
  • A: We want to meet the 2% target by the end of the forecast horizon. We are still looking at preserving favourable financing conditions and we would counter any tightening. We want to alleviate the downside impact of the pandemic on the inflation target. PEPP was for the emergency period of the pandemic; we are still in that emergency period. An exit now would be premature.
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