European Central Bank President Christine Lagarde gave a press conference today (22/07/2021) after the bank’s latest monetary policy decision. Below are the key quotes taken from her address.

Key Quotes Summarised

The ECB will communicate in a more friendly manner. ECB focuses on counseling and economic assessment.

Inflation is expected to remain considerably below the target. The recovery is on track. The revised guidance is to underline the commitment to maintain an accommodative stance. The rise in inflation is only likely to be temporary.

The pandemic continues to throw a shadow. The Delta variant is increasing uncertainty. The Delta variant of COVID could hinder recovery in services.

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It is necessary to maintain favorable funding conditions. Inflationary expectations are expected to be muted in the medium term. We are ready to adjust all instruments as required.

Manufacturing is expected to be solid. In the third quarter, the economy is expected to develop strongly. In the second quarter, the economy improved. The reopening of the economy supports a recovery in services. Manufacturing is anticipated to do well. By the first quarter of next year, activity should be back to pre-crisis levels. There is still a long way to go until the effects of the pandemic are mitigated.

We need ambitious, well-coordinated and well-targeted fiscal assistance. By the start of next year, inflation is likely to fall once more. Inflation is expected to grow much more in the following months.

Higher energy prices are causing inflation to grow, which has a base effect.

The influence of temporary factors should fade off by early 2022.

Price pressures are being held down by slack. Price pressures will be kept low by weak wage growth and forex appreciation. During the medium run, there will be a modest increase in underlying inflation, though it will remain below goal. Underlying price pressures would steadily intensify.

The risks to the economic outlook are broadly balanced. The outlook is dependent on the pandemic's progress and vaccinations.

Firms are well-funded, which explains the loan slowdown. There was an overwhelming consensus on the calibration of guidance. We anticipated dissent, we're on the same page directionally. Being well ahead would be the mid-point in the projection horizon. For rates to increase, inflation cannot be below 2%. Some containment and lockdown measures were expected to last until Q4 according to the June forecast.

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All of the data points support the projections. No one wants to tighten prematurely. Patience was tried to be incorporated into rate guiding.

PEPP and its future was not discussed. We would oppose any tightening of financing restrictions that is incompatible with the goals.We are still in a moment of crisis. Any exit at this time would be premature.

On Thursday, there was no mention of Targeted Longer-Term Refinancing Operations.

The September predictions are more reflective of the outlook. September projections will impact the ECB policy ahead. Just a small amount of rate-setters are opposed to the new guidance. There was no discussion about APP. Overshooting the target would be unintentional. Today's disagreement was at the margins.