Defends that interest rates will be at sufficiently restrictive levels "for as long as necessary"
MADRID, 25 Ago. (EUROPA PRESS) -
The president of the European Central Bank (ECB), Christine Lagarde, has stressed that the tightening of monetary policy is making progress, although she has warned that "the fight against inflation is not yet won".
In the current environment, for the ECB this means setting interest rates at sufficiently restrictive levels "for as long as it takes" to achieve a timely return of inflation to the medium-term objective of 2%, he stressed in a speech delivered at the forum hosted by the Kansas City Federal Reserve in Jackson Hole.
In this sense, the French company has pointed out the possibility that we are entering an era of changes in economic relations, which for monetary managers with a stability mandate poses a significant challenge.
As such, and given that central bank policies operate with lags, one cannot wait for the parameters of the new environment to become fully clear before acting, although the effects of the decisions taken will only be truly understood after their implementation.
In such a scenario, for Lagarde clarity is important to establish the proper role of monetary policy, assuming that price stability is a fundamental pillar of a favorable environment for investment, so that "monetary policy should not become itself itself into a source of uncertainty".
This will be crucial to keep inflation expectations firmly anchored even when there are temporary deviations from our target, as may be the case in a more shock-prone economy, the ECB president has argued, adding the importance of maintaining public confidence that , even in a new environment, you don't lose sight of the goal. "We must and will keep inflation at 2% in the medium term," she assured.
"There is no pre-existing manual for the situation we are facing today, so our task is to come up with a new one," Lagarde said.
Thus, for the French, policymaking in an era of change and disruption requires an open mind and a willingness to adjust analytical frameworks in real time to new developments while central banks provide an anchor for decision-making. economy and guarantee price stability in accordance with their respective mandates.
"And looking to the future we must continue to be clear in our objectives, flexible in our analysis and humble in the way we communicate," he concluded.