Lagarde: We Are Not Pausing

The press conference Q&A begins -Q) Rationale behind reduced pace of interest rate hike?

• A) "Mood" is "determined". All governors are determined to fight inflation, tame inflation and return it to 2% medium-term. All concluded inflation outlook is too high and has been for too long.
• Mood was very focused - very attentive to data including Bank Lending Survey.
• "Method-dependent" as have outlined in 3 criteria for inflation. Everybody agreed that increasing the rate was necessary.
• We are NOT pausing - that is VERY CLEAR. Know that we have more ground to cover on basis of baseline until next projection exercise.
• Sensible to return to more "standard" increment with understanding we have more to do. Says again, "We are not pausing"

Q) How concerned about potential spillover of US bank crisis to euro area?

• A (by Guindos) Have to remember that increasing interest rates is positive for European banks as increase in margins outweighs potential losses in FI portfolios.
• But no place for complacency. Have learnt how rapidly a bank ran can take place with digital banking and social networks.