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Monetary policy must continue to be expansionary and patient if Europe's economy is to safely exit the coronavirus pandemic safely and set itself on the path to sustainable 2% inflation, ECB president Christine Lagarde said Tuesday. Structural changes, along with the atypical nature of the recovery can produce opposing effects on growth and inflation, Lagarde said, some of them temporary, others less clearly so. Looking beyond the pandemic, she continued, the ECB expects inflation to only slowly converge towards 2%.

Lagarde called on fiscal policymakers to adopt a "surgical" approach, "meaning focused on those who have suffered particular hardship," and to deliver the reform programmes agreed under the Recovery and Resilience Facility, although she acknowledged a rules-based sustainable framework would need to be put in place - a reference to ongoing discussions over the future of the EU's Stability & Growth Pact which limits government spending and debt.