© Reuters. FILE PHOTO: European Central Bank (ECB) President Christine Lagarde in Frankfurt, Germany, March 12, 2020. REUTERS / Kai Pfaffenbach / File Photo / File Photo / File Photo
FRANKFURT, July 22 (Reuters) – The European Central Bank on Thursday pledged to keep interest rates at record highs for even longer to help sluggish eurozone inflation return to its elusive 2% target .
Here are the highlights of ECB President Christine Lagarde’s comments at a press conference after the policy meeting.
REACH THE 2% TARGET
“In short, the euro zone economy is rebounding strongly. But the outlook continues to depend on the cause of the pandemic and the progress of vaccinations. Much of the current rise in inflation is expected to be temporary, with underlying price pressures likely to increase gradually. medium-term inflation, still well below our target.
“Our policy measures, including our revised forecast, will help the economy move into a solid recovery and ultimately bring our inflation down to our 2% target.”
“We were not unanimous but we had an overwhelming majority on the calibration of the ECB’s forward guidance on interest rates.”
MANUFACTURING, SERVICES AND DELTA
“We expect the manufacturing sector to perform well, even if bottlenecks hamper production in the near term.
“The reopening of large parts of the economy supports a strong rebound in the services sector, but the Delta variant of the coronavirus could notably slow this recovery in services.”
SUSTAINED PRICE PRESSURE
“In the short term, the significant slowdown in the economy is dampening underlying inflationary pressures. Stronger demand and temporary cost pressures in the supply chain are putting some upward pressure on prices, but weak wage growth and the past appreciation of the euro mean that the pressures on prices will likely stay behind for some time.
“There is still some way to go before the fallout from the pandemic on inflation is wiped out.”
PRESERVE FAVORABLE FINANCIAL CONDITIONS
“The recovery of the eurozone economy is on track. More people are getting vaccinated and lockdown restrictions have been relaxed in most eurozone countries. But the pandemic continues to cast a spell shadow, especially as a growing source of uncertainty. Inflation has although this increase is expected to be mostly temporary. The medium-term inflation outlook remains subdued. We need to preserve favorable financing conditions for all sectors of the economy. economy during the pandemic period. This is essential for the current rebound to turn into a sustainable expansion, and to offset the negative impact of the pandemic on inflation. “
“As the economy recovers, supported by our monetary policy measures, we expect inflation to rise over the medium term while remaining below our target.”
RECOVERY SUPPORTS INVESTMENT
“The ongoing recovery in domestic and global demand is fueling business optimism, which is supporting investment. For the first time since the start of the pandemic, our survey of bank lending indicates that fixed investment financing is an important factor driving demand for business loans. “
STRONG GROWTH IN Q3
“The economy rebounded in the second quarter of the year and, as restrictions eased, it is on track for strong growth in the third quarter.”
“The medium-term inflation outlook remains subdued.”
(Reuters Global News Service)
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