The Economic and Monetary Affairs Committee quizzes the European Central Bank President Christine Lagarde on the implications for the ECB of the war in Ukraine, as well as on the high and disparate inflation in the Eurozone. Christine LAGARDE annonces that the Governing Council has decided to bring inflation back to its medium term target of 2%.

meeting

European Central Bank

monetary dialogue with the ECB (T)

Committee on Economic and Monetary Affairs

LAGARDE, Christine (FR)

TINAGLI, Irene (S&D, IT)

Monetary dialogue with Christine LAGARDE, President of the European Central Bank: extract from the meeting - ECON Committee

Title: Monetary dialogue with Christine LAGARDE, President of the European Central Bank: extract from the meeting - ECON Committee

Arrival of Christine LAGARDE, ECB President to the ECON Committee meeting

SOUNDBITE (English), Irene TINAGLI (S&amp;D, IT), Chair of ECON Committee This is the first monetary dialogue since the invasion of Ukraine. And according to Eurostat annual headline, inflation in the euro area reached an 8,1 % in May. June Eurosystem staff forecast the headline inflation of 6,8 % percent in 2022 to 3,5 % in 2023 and 2,1 % in 2024.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank Euro area activity is being dampened by high energy costs, intensified supply disruptions and greater uncertainty. which affects the manufacturing sector in particular. At the same time, activity in the service sector is supporting growth and the recovery in this sector is expected to strengthen over the coming months. The lifting of pandemic related restrictions and good prospect for the tourist season are driving stronger activity, particularly in conduct intensive services.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank: Looking at inflation, it has risen further standing, as you said, president at eight point one percent in May, energy prices stand thirty nine point two percent above the level. One year ago, food prices rose seven point five percent in May, in part reflecting the importance of Ukraine and Russia amongst the main global producers of agricultural goods, particularly grames.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank The baseline inflation projections by Eurosystem staff have been revised up significantly. These projections indicate that inflation will remain undesirably high for some time. They foresee annual inflation at six point eight percent in 2022 before it is projected to decline to three point five percent in 2023 and two point one percent in 2024.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank: That is why at its eighth and ninth June meeting, the Governing Council expressed its unwavering commitment to bring inflation back to its medium term target of 2%

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank We decided to end net asset purchases and our asset purchase programme as of July 1st, 2022. Second, as the Governing Council concluded that the conditions underlying our forward guidance have been satisfied, we intend to raise the key ECB interest rates by 25 basis points at our July monetary policy meeting.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank, We expect to raise the key ECB interest rates again. Incepted. The calibration of this rate increase will depend on the updated Medium-Term Inflation Outlook.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank, We anticipate that a gradual but sustained path of further increases in interest rates will be appropriate in line with our commitment to our 2% medium term target, the pace at which we adjust our monetary policy will depend on the incoming data and how we assess inflation to develop in the medium term.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank, Fiscal policy is helping to cushion the impact of the war, and governments have intervened to slow energy inflation alongside targeted fiscal policies. The implementation of the Next Generation EU programme, the 54 55 package and the repowering EU plan should also help the euro area economy.