ATHENS (Reuters) – The European Central Bank left interest rates unchanged as expected on Thursday, snapping an unprecedented streak of 10 consecutive rate hikes, and maintained its guidance which signals steady policy ahead.
Following are highlights of ECB President Christine Lagarde’s comments at a news conference after the policy meeting, which was held in Athens.
ISRAEL/PALESTINIAN CONFLICT
“You have a special sentence in the mps (policy statement) that refers specifically to.. the tragic developments as a result of the terrorist attack on Israel. We are monitoring the situation. We are very attentive to the economic consequences that that could have, whether in terms of direct or indirect impact on energy prices, or the level of confidence that economic actors will continue to display.”
INFLATION
“Be under no doubt our determination is intact and our determination to bring inflation to 2% in the medium term is absolutely the same, if not reinforced by the proximity of the destination.”
NO RATE CUT TALK
“Even having discussion on a (rate) cut is totally, totally premature.”
NO FORWARD GUIDANCE
“Now is not the time for forward guidance.”
PEPP AND REQUIRED RESERVES DISCUSSED?
“Neither of these two questions – nor the PEPP (Pandemic Emergency Purchase Programme) nor the remuneration of required reserves have been discussed at this meeting.”
CLOSELY MONITORING INDICATORS
“Measures of longer-term inflation expectations mostly stand around 2%. Nonetheless, some indicators remain elevated and need to be monitored closely.”
ECONOMY TO REMAIN WEAK
“The economy is likely to remain weak for the remainder of this year. But as inflation falls further, household real incomes recover and the demand for euro area exports picks up, the economy should strengthen over the coming years.”
DOWNSIDE GROWTH RISKS
“The risks to economic growth remain tilted to the downside.”
PRICE PRESSURES
“Domestic price pressures are still strong.
SERVICES WEAKENING
“The services sector is also weakening further. But this is mainly because weaker industrial activity is spilling over to other areas.”
ECONOMY WEAK
“The euro area economy remains weak.”
(Reuters Global News Desk)
