HIGHLIGHTS-Lagarde comments at ECB press conference

© Reuters. European Central Bank (ECB) President Christine Lagarde speaks to reporters following the Governing Council’s monetary policy meeting, in Frankfurt, Germany February 2, 2023. REUTERS/Kai Pfaffenbach

FRANKFURT, Feb 2 (Reuters) – The European Central Bank raised interest rates again on Thursday and pencilled in at least one more hike of the same magnitude next month.

Following are highlights of ECB President Christine Lagarde’s comments at a news conference after the policy meeting.

CONTINUITY AND CONSISTENCY

“The expression ‘we shall stay the course’ or ‘the Governing Council will stay the course’ is a good way to express that double principle of continuity and consistency.”

‘INTEND’ TO RAISE RATES

“We intend – which is a strong word – it is not an absolute irrevocable unconditional commitment but it is a strong word. We intend to raise by 50 basis points.”

INFLATION OUTLOOK RISKS

“The risks to the inflation outlook have become more balanced.”

FUTURE PRICE PRESSURES

“A further weakening of demand would also contribute to lower price pressures than currently anticipated, especially over the medium term.”

CONTINUED MONITORING OF INFLATION

“Most measures of longer-term inflation expectations currently stand at around 2%, but these warrant continued monitoring.”

PENT-UP DEMAND

“Although supply bottlenecks are gradually easing, their delayed effects are still pushing up goods price inflation. And the same holds true for the lifting of pandemic-related restrictions. While weakening, the effect of pent-up demand is still driving up prices, especially in the services sector.”

STRONG PRICE PRESSURES

“Price pressures remain strong, partly because high energy costs are spreading throughout the economy.”

UNDERLYING INFLATION

“Other indicators of underlying inflation are also still high.”

ECONOMIC OUTLOOK

“The risks to the outlook for economic growth have become more balanced.”

ENERGY PRICES

“Market-based indicators suggest that energy prices over the coming years will be significantly lower than expected at the time of our last meeting.”

ROLLING BACK GOVT SUPPORT

“As the energy crisis becomes less acute, it is important to now start rolling these measures back promptly in line with the fall in energy prices and in a concerted manner. Any such measures falling short of these principles are likely to drive up medium-term inflationary pressures, which would call for a stronger monetary policy response.”

RESILIENT ECONOMY

“Overall, the economy has proved more resilient than expected and should recover over the coming quarters.”

BOTTLENECKS EASING

“Supply bottlenecks are gradually easing. The supply of gas has become more secure, firms are still working off large order backlogs, and confidence is improving.

“Moreover, output in the services sector has been holding up, supported by continuing reopening effects and stronger demand for leisure activities.”

HEADWINDS

“Subdued global activity and high geopolitical uncertainty, especially owing to Russia’s unjustified war against Ukraine and its people, continue to act as headwinds to euro area growth. Together with high inflation and tighter financing conditions, these headwinds dampen spending and production, especially in the manufacturing sector.”

WEAK GROWTH

“Economic activity has slowed markedly since mid-2022 and we expect it to stay weak in the near term.”

(Reuters Global News Desk)