Lagarde Warns On Risks Of Tightening Too Quickly

ECB President Lagarde has released comments via an interview with Redaktionsnetzwerk Deutschland. She stressed that if the ECB acts too quickly re: tightening policy, it could weaken the post-COVID economic recovery, highlighting the idea that a rate hike would “not solve any of the current problems.” She reaffirmed the well-defined sequencing when it comes to policy normalisation, in addition to the ability of the ECB to act “gradually”, if required. Lagarde remains confident that inflation will fall back during the course of ’22 (although conceded that it may provide an upside surprise vs. the Bank’s Dec projections), while noting that inflation will stay relatively high in the coming months (she differentiated Eurozone economic issues vs. that seen in the likes of the U.S. & UK). She also flagged moderate wage demands in most Eurozone nations.