In a speech, ECB President Christine Lagarde said the “rapid reopening” of the economy has led to steep rises in fuel prices, gas and electricity and price hikes in durable goods and some services. These factors are “weighing on growth in the near term”. Higher energy prices are “cutting into household incomes and denting confidence”. Supply bottlenecks are leading to “shortages in the manufacturing sector.
“That is why, at our last Governing Council meeting, we recalibrated our policy measures, allowing for a step-by-step reduction in the pace of our net asset purchases,” she added.
However, Lagarde also noted, “at the same time, we concluded that monetary accommodation is still needed for inflation to settle at 2% over the medium term.”
