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Lagarde: QT Will be Predictable And Measured

ECB

Q: Were you discussing the negative side effects of raising rates, particularly with respect to the real estate sector and banks?

  • A: The tightening of financing conditions and higher rates is good transmission of our monetary policy. We are attentive to the impacts and to financial stability. Our objective is to reduce inflation, but to drive it down to 2% in the medium term. There will be consequences and secondary effects where banks are concerned.

Q: On QT, could you explain what you think you want to achieve and whether there is discussion to accelerate it?

  • A: In the current circumstances our main tool is the interest rate. The balance sheet normalisation is helping us to normalise the process – it’s not the main instrument. It will be predictable and measured.

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