Lagarde: Unanimity On Framework (Though Not For How It Was Calibrated)

The press conference Question and Answer period begins:

Q: Run through the discussion on changing the forward guidance. Was there unanimity for this change?

• A: There was unanimity on the framework. There was unanimous agreement that the ECB had to revise the forward guidance, which had to implement the outcome of the strategy review. There was a majority, but not unanimous support for how this was calibrated.
• The forward guidance rests on three elements. Rates will remain at current levels or lower until the Governing Council sees inflation rising to 2%:
  • well ahead of the end of the projection horizon
  • and durably for the rest of the projection horizon
  • and we judge that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at 2% over the medium term.
• This may imply a period where inflation is in transitory overshoot.

Q: On the delta variant, do you see a risk that the emergency phase of the pandemic will last longer?

• A: The June projection included some assumption that certain containment and lockdown measures would be continued into the third quarter, with some even lasting until the fourth quarter.