Lagarde of the ECB, in favor of not withdrawing monetary stimuli prematurely

The president of the European Central Bank (ECB), Christine Lagarde, warned that it is not advisable to “withdraw monetary stimulus prematurely in the euro area” because the current high inflation will subside.

At the 31st European Banking Congress in Frankfurt, Lagarde reiterated that “it is very unlikely that the conditions will exist to raise interest rates next year ”.

Even, he added, after the emergency situation of the pandemic ends, “it will be important for monetary policy, including the adjustment of asset purchases, supporting the recovery and the sustained return of inflation”To the 2% target.

The ECB will announce its intentions regarding the purchases of public and private debt after their meeting in mid-December on the decisions.

“If we are patient and consistent now, I am sure these conditions will be achieved.”Added the President of the ECB.

Lagarde was convinced that the current inflationary pressures will subside over time and that they will achieve their objective of 2% in the medium term.

“This inflation is untimely and painful and there are naturally concerns about how long it will last. We take these concerns very seriously and watch developments carefully“, said Lagarde.

The president of the ECB acknowledged that “higher inflation reduces people’s real incomes, especially those at the bottom of the income distribution. “

But tightening monetary policy prematurely would not only reduce household incomes further, it would not address the causes of inflation because energy prices are set globally and the monetary policy of the ECB cannot remedy supply bottlenecks, depending on Lagarde.