ECB’s Lagarde Signals No Major Policy Shift at Next Meeting
European Central Bank President Christine Lagarde played down the possibility of a major change away from the current stimulus settings when policy makers meet next month.
“It’s far too early and it’s actually unnecessary to debate longer-term issues,” Lagarde said at a news conference in Lisbon on Friday, responding to a question on whether Europe’s economic rebound may lead the ECB to taper its emergency bond-buying program.
“Our commitment to the euro area is to maintain favorable financing conditions throughout the whole pandemic period,” she said.
A pick up in vaccination efforts and a drop in infections have fueled speculation that the ECB could soon start discussing scaling back support. The central bank stepped up its bond purchases this quarter to counter rising borrowing costs driven by the faster U.S. recovery.
The ECB’s Governing Council will meet on June 10 to review updated forecasts for the euro area.
The euro fell against all of its group-of-10 peers after Lagarde’s comments, slipping 0.4% to $1.2182. European bonds held onto earlier gains, with Italian securities outperforming to send 10-year yields four basis points lower to 1.02%.
Lagarde also reiterated her view that higher inflation figures in 2021 would be temporary. Policy makers should see through the acceleration in price gains because underlying factors for sustained growth “are certainly not there,” she said.
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