Lagarde speech: Rates will be kept sufficiently restrictive for as long as necessary

Eren Sengezer FXStreet

While testifying before the European Parliament's Committee on Economic and Monetary Affairs on Monday, European Central Bank (ECB) President Christine Lagarde said that they expect the economic recovery in the Eurozone to strengthen over time.

Key takeaways

"Looking ahead, the suppressed level of some survey indicators suggests that the recovery is facing headwinds."

"The labour market remains resilient."

"Employment growth slowed to just 0.2% in the second quarter, and recent indicators point to a further deceleration in the coming quarters."

"Looking ahead, inflation might temporarily increase in the fourth quarter."

"The latest developments strengthen our confidence that inflation will return to target in a timely manner."

"We will take that into account in our next monetary policy meeting in October."

"Policy rates will be kept sufficiently restrictive for as long as necessary to achieve our aim."

"The new data available at the time of the September Governing Council meeting reinforced our confidence in the timely return of inflation to our 2% target."

Market reaction

EUR/USD came under modest bearish pressure with the immediate reaction to these comments and was last seen trading near 1.1170, where it was virtually unchanged on the day.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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