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Lagarde declined to provide specific guidance regarding the ECB’s upcoming June 11 meeting. She emphasized that the bank will maintain a “data-dependent” and “meeting-by-meeting” approach to ensure inflation returns to its 2% target.
She highlighted the energy price shock that is simultaneously driving up inflation and slowing economic growth. While long-term inflation expectations remain “well-anchored,” the ECB is closely monitoring “second-round effects” (such as wage-price spirals) that could influence medium-term expectations.
Lagarde noted that even an immediate resolution to the conflict in the Middle East would not provide instant relief. Due to “lag effects” and the need to restore previous market conditions, the impact of the crisis will continue to be felt for some time. She suggested it is likely that price levels will remain permanently higher following the crisis.
She urged governments to keep fiscal measures temporary, targeted, and tailored
