|
Conservative policymakers have called on the ECB to avoid
long-term commitments at the Dec. 16 gathering given recent high
inflation readings and a resurgence of the coronavirus pandemic,
including the emergence of the Omicron variant.
Some have even discussed the possibility of pushing out a
decision into early 2022, hoping a delay will bring more clarity
on growth and inflation - an option Lagarde firmly dismissed on
Friday.
"There are ways to give clarity without making long-term
commitments and I would err on the side of not making (a) very
long-term commitment because there is too much uncertainty,"
Lagarde said in an interview at the Reuters Next conference.
"But equally, we need to very clearly indicate that we stand
ready (to act), in both directions." Once conditions for a rate
rise are met, she said, the ECB "would not hesitate to act".
Lagarde played down concerns over the Omicron variant, arguing
that Europe has adapted well to life under the pandemic.
"We should be on alert but I think we should also take some
confidence from the fact that we have learned to live with
previous variants," she said. "Another wave, as we are
experiencing in the euro area ... was something we have included
in our adverse scenario (of our projections)."
The December meeting will be the most crucial this year. The
euro zone's central bank has already said it will wind down its
1.85 trillion euro pandemic emergency stimulus scheme in March
and will 'recalibrate' other tools to fill the void.
Lagarde would not discuss options for the meeting but said she
remains of the view that the Pandemic Emergency Purchase
Programme, the ECB's key tool over the past two years, should
end, and that interest rates should not rise next year.
Dutch policymaker Klaas Knot, among the most conservative
Governing Council members, backed Lagarde's call for unchanged
rates on Friday but kept the door firmly open to a move in 2023
given inflation risks.
Lagarde, however, maintained her benign view on consumer price
growth, even as upside risks appear to be growing and U.S.
policymakers are giving up on their view that high inflation is
temporary. Inflation may have already peaked, she said.
Unlike in the United States, Europe's labour market still has
plenty of slack as unemployment remains high, Lagarde added.
Inflation in the 19-country currency bloc soared to a record
4.9% last month, more than twice the ECB's 2% target. Indicators
suggest that it will only fall below that mark in late 2022 at
the earliest.
"I see an inflation profile that looks like a hump," Lagarde
said. "And a hump eventually declines.
"We are firmly of the view, and I'm confident, that inflation
will decline in 2022."
To watch the Reuters Next conference please register here
https://reutersevents.com/events/next/
(Reporting by Balazs Koranyi and Francesco Canepa; Editing by
Catherine Evans)
[© 2021 Thomson Reuters. All rights
reserved.] Copyright 2021 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
