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Lagarde’s press conference - key takeaways

14:30 9 September 2021

The press conference with the ECB President Lagarde has just ended. Below we present some key takeaways:

  • Rebound phase in recovery increasingly advanced

  • The economy has mostly reopened

  • Economy seen returning to pre-pandemic level by year-end

  • GDP forecast:

    • ECB sees 2021 GDP growth at 5% (vs 4.6% in June’s forecast)

    • ECB sees 2022 GDP growth at 4.6% (vs 4.7% in June’s forecast)

  • The Delta variant spread could postpone the economy’s full reopening

  • Inflationary pressures are now high, but are due to be temporary

  • Inflation outlook has been up slightly, underlying price pressures are gradually increasing

  • Inflation is expected to rise further in the autumn

  • Wages expected to grow only moderately

  • Medium-term inflation is seen well below target

  • Ready to adjust all instruments as needed

  • Manufacturing held back by supply shortages, shortages holding back production

  • If the pandemic worsens and supply constraints persist, growth could be hampered

  • Vaccination success is the foundation for recovery

 

As far as the Q&A session is concerned, President Lagarde answered multiple questions, including the PEPP or inflation:

  • The decision is not tapering, but recalibration of PEPP

  • The ECB reduces assistance, but maintains that stimulus will continue

  • Decision today on PEPP pace was unanimous

  • After PEPP ends, the task isn’t done

  • There was no discussion about what would happen next

  • The PEPP debate will be handled in December

  • The energy base effect is a significant component of inflation

  • We’ll have to wait and watch how the supply squeeze affects inflation

  • I’m monitoring the effect of the second wave of inflation

  • In terms of wage increases, we’re not seeing much

  • We expect bottlenecks to be bypassed in the first half of 2022

  • We are pretty far away from ending bond purchases, raising rates

  • Fiscal support has to be continued & to be more targeted

Source: The European Central Bank

Source: The European Central Bank

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