ECB President Christine Lagarde said in a speech that the Russia-Ukraine war would “lower growth and raise inflation through higher energy and commodity prices, the disruption of international trade and weaker confidence”. But the baseline scenario is still for the economy to “grow robustly in 2022”.

However, “uncertainty surrounding the outlook had increased significantly”, policy makers are looking at two alternative scenarios that ” growth could be dampened significantly and inflation could be considerably higher in the near term”. Still, “in all scenarios, inflation is still expected to decrease progressively and settle at levels around our two per cent inflation target in 2024.”

Lagarde added that if data support the expectation that medium-term inflation outlook will not weaken even after the end of net asset purchases, ECB will “conclude net purchases in the third quarter”. Any adjustments to interest rates will “take place some time after the end of our net purchases and will be gradual.”

Full speech here.

ECB Governing Council member Francois Villeroy de Galhau reiterated to BFM business radio, “we have said that if the rise in interest rates were to start, it would be very gradual. We have decided to lift our foot off the accelerator … but there is not the automaticity we seen in other central banks.”

Villeroy also dismissed the idea that rising commodity prices could drag Eurozone into recession. He said, “growth remain positive, there is no recession.” Meanwhile, he expected inflation to “get back down to around 2%” from from the current 5.1% level.

Another Governing Council member Olli Rehn echoed, “any adjustments to the key ECB interest rates will take place some time after the end of the APP net purchases and will be gradual.”