European Central Bank President Christine Lagarde spoke on Saturday at an International Monetary Fund event.
- “Inflation is largely transitory”
- “ECB is committed to preserving favourable financing conditions for all sectors of the economy over the pandemic period.”
- “Once the pandemic emergency comes to an end — which is drawing closer — our forward guidance on rates as well as asset purchases will ensure that monetary policy remains supportive of the timely attainment of our target”
The “T” word lives on, although there were some cracks beginning to show from the Federal Reserve and IMF last week:
Recall when one Fed official started making noise about that other T word, tapering? That was Dallas Fed ex-President Kaplan and he was largely dismissed before others came around (and of course then he really was dismissed, or resigned as the history books will show). Be on the lookout for the ending of the ‘transitory’ narrative – its only whisperings at this stage from a few scattered officials, although interest rate markets are pricing earlier hikes than the ‘transitory’ narrative would have us believe.