Lagarde speech: Risks surrounding euro area growth outlook have become more balanced
|“The risks surrounding the euro area growth outlook over the medium term have become more balanced,” the European Central Bank (ECB) President Christine Lagarde said in her testimony before the Committee on Economic and Monetary Affairs of the European Parliament, in Brussels.
Additional comments
The ongoing vaccination campaigns, together with the gradual relaxation of containment measures underpin the expectation of a firm rebound in economic activity in the second half of 2021.
Downside risks remain in the near term.
Sizeable and persistent increases in market interest rates, when left unchecked, may become inconsistent with countering the downward impact of the pandemic on the projected path of inflation.
Purchases will be implemented flexibly according to market conditions.
There is no room for complacency.
The ECB will continue to deliver on its mandate and support the recovery with all appropriate measures.
Continue to monitor developments in the exchange rate regarding their possible implications for the medium-term inflation outlook. We stand ready to adjust all of our instruments.
Our key ECB interest rates to the governing council’s forward guidance and the asset purchase programme – make a crucial contribution.
Step-up in PEPP will become more visible over time.
Yields increase is getting ahead of the economic recovery.
ECB is not focused on blips in inflation.
EU fiscal support packaged needs to be delivered upon.
Expect reasonably high TLTRO take up on Thursday.
Market reaction
Lagarde’s comments fail to move the euro, as the EUR/USD pair remains at the mercy of the dynamics in the US Treasury yields.
A big jump in the Treasury yields across the curve drove the US dollar higher and weighed down the on spot. The pair now trades at 1.1951, down 0.20% on the day, having dropped sharply from near the 1.1990 region.
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