Christine LAGARDE, President of the European Central Bank debates with MEPs on ECB annual report 2023.

Strasbourg

debate

plenary session

McGUINNESS, Mairead (EPP, IE)

European Central Bank annual report (T)

LAGARDE, Christine (FR)

VAN OVERTVELDT, Johan (ECR, BE)

European Central Bank - annual report 2023: extracts from the debate with Christine LAGARDE, President of the European Central Bank

SOUNDBITE (Dutch), Johan VAN OVERTVELDT (ECR, BE), Rapporteur, In terms of geopolitical stability and also in terms of globalization, we have seen very profound changes. Add to that the impact of the pandemic on the international supply chains and you will get a different picture of the supply side of the economy, it has become a lot less flexible and is therefore much less able to respond to changes in demand purely with output changes. Nevertheless, the consistent completion of the task of keeping inflation low remains essential. We want to be able to achieve the necessary growth and the necessary strategic investments.

SOUNDBITE (Dutch), Johan VAN OVERTVELDT (ECR, BE), Rapporteur, Two considerations that seem important to me. First, with regard to monetary policy: avoid asymmetry. In the past, central banks took immediate action when financial commotion or economic downturn continued. Scaling back that super-flexible monetary policy was all too often slow and hesitant. Secondly, maybe more modesty. Focus on the main task, price stability and other important social goals. But rather leave it to the appropriate institutions in the matter.

SOUNDBITE (English) Christine LAGARDE, President of the European Central Bank, The euro area has been facing significant headwinds from a series of sudden and consecutive shocks which pushed inflation very high in the wake of the post-pandemic recovery. Having peaked at 10.6% in October 2022, inflation has since declined significantly, thanks to the unwinding of energy shocks and various supply side disruptions along with determined policy action

SOUNDBITE (English) Christine LAGARDE, President of the European Central Bank, However, there are now increasing signs of a bottoming out and some forward looking indicators point to a slight pickup later this year. Despite the sluggish economy, the labour market has remained resilient and employment stood at a historical low of 6.4% in December

SOUNDBITE (English) Christine LAGARDE, President of the European Central Bank, Inflation decreased slightly to 2.8% in January. Energy prices declined by 6.1% and food inflation was still elevated, came down further to 5.6%

SOUNDBITE (English) Christine LAGARDE, President of the European Central Bank, Faithfully implementing the EU revised Economic Governance framework will help ensure that fiscal rules reduce high government debt and promote structural reforms and productive public investment, including for the green and digital transitions. I am pleased that EU policymakers, including this Parliament, thank you very much, have recently reached a provisional agreement on the new framework, which should be swiftly and diligently implemented. This will be essential to enhance credibility and anchor expectations about the future course of fiscal policies.

SOUNDBITE (English), Mairead MCGUINNESS, European Commissioner for Financial Services, Now, looking ahead, both the Commission and the ECB expect inflation to come down towards 2% by 2025. And as inflation comes down, economic growth is forecast to gradually pick up over the course of this year.

SOUNDBITE (English), Mairead MCGUINNESS, European Commissioner for Financial Services, would add that investment is expected to increase in most Member States, both nationally financed investments and the continued support from the Recovery and Resilience Facility and other EU funds. And this is important as it will support sustainable growth.