In an interview with the Financial Times (FT) on Tuesday, the European Central Bank (ECB) President Christine Lagarde made important remarks on the new strategy and a potential tightening.
Key quotes
“The use of “persistent” is an indication that there cannot be premature monetary tightening as we have seen it in the past.”
“New strategy gives us the ability to be flexible around 2% inflation.”
“2% is not a ceiling, we recognize there will be oscillation around 2%.”
“We accept that it may imply on a transitory basis, moderate deviations above 2%.”
“We will have to redefine our forward guidance to align with strategy review.”
“Not under the illusion that every policy meeting will have unanimity.”
“There will be different positioning and that is fine.”
Market reaction
EUR/USD is holding the lower ground near 1.1850 on Lagarde’s comments, modestly flat on the day, having faced rejection at 1.1875 earlier in the Asian trades.
