Well, thank you so much, and you actually give me a chance to reverse the order of your questions, because I would like to address the second part of your question, which had to do with the economic outlook, because I think that it in a way determines what was decided today at our monetary policy Governing Council. The second question is: did anybody at the table suggest, propose or make the argument for increasing the total envelope for PEPP? Strong money growth continued to be supported by the ongoing asset purchases by the Eurosystem, which remain the largest source of money creation. While the overall economic situation is expected to improve over 2021, there remains uncertainty surrounding the near-term economic outlook, relating in particular to the dynamics of the pandemic and the speed of vaccination campaigns. President Lagarde, as you mentioned in your introductory statement just now, the latest bank lending surveys suggested that credit standards tightened for loans to enterprises and households. If I look now at the not-so-positive elements, clearly, the pandemic has worsened in many countries. And it has this dual function of stance and transmission as well. We look at the credit conditions, we look at the yields of corporates, yields of sovereigns, and it’s this composite approach and this multiple-indicators approach that we take into account to determine whether the financing conditions are favourable or not. We will now report on the outcome of the meeting of the Governing Council, which was also attended by the Commission Executive Vice-President, Mr Dombrovskis. There is clearly limited pressure up on wages. I think in the current environment the ECB will continue to monitor developments in the exchange rate, but we don't focus on the exchange rate as such. I use the word “holistic” and I use the word “multifaceted”. The monthly lending flow to non-financial corporations remained very modest in November, continuing the pattern observed since the end of the summer. The news about the prospects for the global economy, the agreement on future EU-UK relations and the start of vaccination campaigns is encouraging, but the ongoing pandemic and its implications for economic and financial conditions continue to be sources of downside risk. That’s a first positive. Third positive, the fact that European leaders have now reached complete agreement and removed the last hurdles to the Next Generation EU issuance at the EU level, and that really provides some certainty as to the fiscal stimulus that will be coming in the months and years to come. Many people are a little worried about what will happen to them with the digital euro. The US looks likely to launch a major stimulus under President Biden, but as things stand, most euro zone countries are planning to reduce their fiscal stimulus this year. Currently, there is discussion about easing or perhaps changing the Stability and Growth Pact also in response to that unprecedented crisis and the unprecedented debt levels. Strong money growth continued to be supported by the ongoing asset purchases by the Eurosystem, which remain the largest source of money creation. Given that we were a few days away from Governing Council meeting on monetary policy, number 1, and that we were a few days away from having the projections provided by ECB staff, we thought it would certainly be a better idea to do the analysis or the joint assessment that we want to conduct in order to determine what kind of significant increase, as you rightly said, would be needed in order to respond to the commitment that we made. And as I said, our assessment of favourable financing conditions is not driven by any single indicator. To do this, we use the anonymous data provided by cookies. So that's what I really wanted to explain in relation to inflation. "ECB sees 2021 inflation at 1% (vs 0.8% seen in June)." And on that page, I would really want to take this opportunity to wish my colleague and friend, Janet Yellen, the very best in her endeavour to lead the US economy in the way that only she can do it, inclusively and very smartly. So, when you, when I hear the word “fragmentation”, I think about monetary transmission, throughout the whole of the euro area, throughout the member states. This assessment is broadly reflected in the baseline scenario of the March 2021 ECB staff macroeconomic projections for the euro area. The problem of course is you justify your intervention by saying you needed to increase inflation in the past. President Lagarde, I have two questions. Equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation. Over the medium term, the recovery of the euro area economy should be supported by favourable financing conditions, an expansionary fiscal stance and a recovery in demand as containment measures are gradually lifted. How Does The ECB Meeting Affect Traders? Schedules for the meetings of the Governing Council and General Council of the ECB and related press conferences. Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. I wanted to know if you see the strengthening of the euro more or less as a threat that it was in December, and a second question, I was wondering if you could give a market assessment, any advice on how to know whether the ECB is going to use the full PEPP envelope or not, I see this holistic and multifaceted approach a bit confusing. You debated the issue I think a few weeks ago and the leaks were that the ECB intervention might not expand to choosing bond buying according to the CO2 emission of companies. So, these hypotheticals are being confirmed by what we see at the moment. Now, the second question of course is: how do we assess favourability? So we are not monitoring on a weekly basis. Second, we will continue our purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,850 billion. Now, we had a good discussion about the expansion and extension, if you will, of TLTRO at our December meeting, and we came to the conclusion that it should be extended over time, that we should have three new operations, and that the volume that banks could be allowed to borrow against would be moved from 50 to 55 [percent of their stock of eligible loans]. The conference is approximately an hour long and has two parts. So, for all these reasons, we believe that, while it has increased a little bit in the first two years, in the third year, we are still at 1.4, which is far away from our inflation path pre-pandemic, and of course, far away from our aim which is close to, but below, 2%. The first question was on how you see the outlook for the first quarter of this year. PDF full text (146kb) | 4 pages. The annual growth rate of loans to households remained broadly stable at 3.0 per cent in January, after 3.1 per cent in December, amid a solid positive monthly flow. But at the moment we do not see that development in any particular yields pose an issue for euro-area-wide financing conditions. But I can also tell you that we are beginning to implement the decision that was taken today to significantly increase our purchases as of today. Well, I would say first of all that it is based on a holistic and multifaceted approach, our assessment, and it is intended for all sectors. So, it’s a whole package, which, if coupled with our forward guidance, which is also very explicit, forms our monetary policy at this point in time. I would say my second next positive is that an agreement was found between the EU and Brexit and that clearly has to be taken into account, given that our December projections, which were predicated on the same basis as the European Commission, assumed that there would be no agreement and that it would be a WTO blunt agreement. Now, based on the development and the monitoring, different policy options are being considered and could be further explored. And finally, particularly the day after the inauguration of the new US President, the uncertainty that related to the election of the Georgia senators that clearly had an impact on the majority in the Senate was also removed. And we look at the financing conditions and as a result of that we look at the bank lending rates. Madame Lagarde, I know that you've been over how to preserve financial conditions. Our hope is that by the time the general escape clause is deactivated and constraints return, SGPs will have been revisited and will have been improved in order for it to be more simple, more focused on productivity, investment, and also indeed with the fiscal discipline embedded, but probably with a renewed look at what criteria, what measurements are used. And we do that against a projection which was announced in December, which we will revisit for the next monetary policy meeting in March, but which we consider as still broadly valid, on the basis of the pluses and minuses that I have mentioned before. Secondly, can you tell us whether your latest economic forecasts include the effect of the $1.9 trillion stimulus programme that's just been voted through in the US congress? It is a holistic approach, it takes into account multiple indicators, and, you know, bank lending is one, credit conditions is one, corporate yields is one, sovereign bond yields is one, and it’s by combining all of those that we try to assess whether the financing conditions are favourable or not. Madame Lagarde, I have two questions as well. So, if I was to sort of put in two categories the developments that we are seeing, you have the positive developments and the not-so-positive developments, and as part of the positive, I would certainly say, number 1, the fact that the vaccination campaign has now started, now albeit with some difficulty to begin with, but it has now started, we have two vaccines approved, and probably a third one to come. That's how we see it and clearly our inflation aim, and our inflation path pre-pandemic, remain two very important anchors of the monetary policy decisions that we will make. Against this background, we decided to reconfirm our very accommodative monetary policy stance. So, that’s our framework at the moment. We also intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when we start raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. So, we will look at all of it. To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that an ample degree of monetary accommodation is necessary to support economic activity and the robust convergence of inflation to levels that are below, but close to, 2 per cent over the medium term. We focus on the impact that it has on prices and the implication that it has for the medium-term inflation outlook. If we don’t need to use the whole envelope, because the financing conditions will have remained favourable, nonetheless, we will not use the entire envelope. I think what we are observing on a preliminary basis, because this will really be the subject of our March monetary policy Governing Council meeting, but what we are observing is a decline in growth in Q4, and as we all know, when you have a decline in Q4, when you have negative numbers, negative numbers, we’ll see that decline in Q4 will travel into Q1 and will also impact the economic outcome for Q1, added to which, as you’ve said, there are more containment measures, there are intensifications of lockdowns. Governing Council meeting calendar. If, and I’ll read the sentence, “Equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation.” So, I think it goes, I don’t need to re-explain yet again, as I said, our compass, driving force, is the favourable financing conditions. These factors can be expected to fade out of annual inflation rates early next year. It has now been decided, it has been an extraordinary breakthrough for the Europeans at large, that there is this joint borrowing, but it needs to be rolled out promptly, and hopefully we will see the disbursement in the course of 2021 in order to support some of the commitments that are made and some of the identified investments that are proposed by the countries. So, while we import a bit of yield increase, the trade movements are going to come, but our own fiscal measures are not kicking in yet. Yes, and I am sorry if I'm stealing the thunder of some of those who wanted to ask that question, but I know that it's a question that is on your mind. Point number 1. So, I can’t be clearer than that. So, we shall see, but we don’t have enough clear, hard numbers yet to revise in any way. And when, you know, we look at the current economic situation, we are clearly seeing mixed developments and those mixed developments apply to countries, member states, that have been affected in different ways and to different degrees by the pandemic. Underlying price pressures are expected to increase somewhat this year due to current supply constraints and the recovery in domestic demand, although pressures are expected to remain subdued overall, also reflecting low wage pressures and the past appreciation of the euro. 29 January 2021. Christine Lagarde, President of the ECB, Luis de Guindos, Vice-President of the ECB, Frankfurt am Main, 11 March 2021 |. Immediately after the meeting, the President and the Vice President of the ECB explain the decision at the press conference and answer questions from journalists. If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full. Supervisory Board Chair Andrea Enria will present the results of the 2020 Supervisory Review and Evaluation Process (SREP) and answer questions on developments in European banking. But we will be assessing that on a regular basis, and clearly there will be yet another assessment that will take place in March, and obviously at the time when new projections will be available. If you want to improve them, what is the benchmark? We will conduct net asset purchases under the PEPP until at least the end of March 2022 and, in any case, until the Governing Council judges that the coronavirus crisis phase is over. A question first on the headline inflation that is likely to increase as you said. I think they also want to have a look very carefully at what is eventually delivered after the signing into law of what has been voted yesterday by the House of Representatives. Given the inbuilt flexibility that you have, what has kept you from increasing the purchases so far? We are not targeting any particular exchange rate for the euro, but equally we monitor very carefully the development of the rate because clearly it has an impact on economic activity and the outlook for price stability in the euro area. ECB President Christine Lagarde will explain the Governing Council's monetary policy decisions and answer questions from journalists at the Governing Council press conference to be held on 21 January 2021 at 14:30 CET in Frankfurt am Main. And if the envelope is not sufficient, then we will recalibrate the entire envelope. So, why is the ECB supporting a market in such a case, and is this consistent with the parameters that you just set in the previous question? Can you give us a hint of what this discussion is leading to and whether there have been some developments? On the occasion of this particular monetary policy decision, the Governing Council by consensus at the table decided that it was warranted to significantly increase purchases for the next quarter with a monthly reference. At the same time, the annual growth rate remained broadly unchanged, at 7.0 per cent, after 7.1 per cent in December, still reflecting the very strong increase in lending in the first half of the year. We can always expand our vocabulary as long as we know what's behind it. I go back again to the introductory statement and will be happy to read it again, although you have it in front of you I'm sure: “The Governing Council expects purchases under the PEPP over the next quarter to be conducted at a significantly higher pace than during the first months of this year”. It’s one of the two functions of PEPP in particular under the extraordinary circumstances that we are going through. We are looking at a time horizon of a quarter, which conveniently coincides with the staff projections that we receive on a quarterly basis and which will enable us to actually identify whether the financing conditions have evolved, remained favourable and actually help us to counter any downward pandemic effect on our inflation path. So it is not something that is good for the elite or is good for the young or is good for some versus others. Economic developments continue to be uneven across sectors, with the services sector being more adversely affected by the new restrictions on social interaction and mobility than the industrial sector. Jump to the transcript of the questions and answers. I have said repeatedly that it is the biggest challenge that is addressed to us. “Equally”, so what we signal with “equally” is, it’s a balancing act. These projections foresee annual real GDP growth at 4.0 per cent in 2021, 4.1 per cent in 2022 and 2.1 per cent in 2023. The three safety nets endorsed by the European Council for workers, businesses and governments provide important funding support. So, the two will coexist, and will continue to do so if and when there is a digital euro, and I just want to remind you where we are in that process. It has been quite volatile lately and we do monitor carefully. Madame President, coming back to this point about preserving the current financing conditions, I’m curious about your commitment and how far it goes, because, you know, Italy went through some political drama last week, but there was little to no market reaction, which was quite surprising, but this of course was self-inflicted, it’s a domestic issue and no connection to the pandemic. What we mean by multifaceted is clear enough as well. At the same time, fiscal measures taken in response to the pandemic emergency should, as much as possible, remain targeted and temporary in nature. To do this, we use the anonymous data provided by cookies. I think I’m now getting old enough to be realistic and to observe the development of the situation, which is really hard to predict, and really hard to forecast. The anchor is the countering, the downward impact on inflation, on our inflation path, the downward impact of the pandemic on the inflation path, and if we determine that the financing conditions are favourable, then we adjust. Christine Lagarde: ECB press conference - introductory statement. ECB Governing Council Press Conference - 11 March 2021. The Next Generation EU, as we say in the introductory statement, is critically important in order to help stimulate the European economies from a fiscal point of view and is also terribly important for two other reasons: because it needs to address the issue of heterogeneity between countries and between sectors, and it needs to focus on what will be productivity enhancing and moving our economies and our Europe into the future with the focus on digital and green. That's to my point of the time lag. And secondly, the account from your last meeting also showed that some reservations were expressed about how much the TLTRO borrowing allowance should be increased, so can you give us an idea of what the Governing Council’s latest thinking is on what limitations exist as to how much policy can or should be eased to the TLTROs, and whether there’s any concerns about being seen as excessively subsidising the banking system? What is your view of such a proposal, and what is your reply to endless commentary that in fact the ECB’s already doing de facto yield curve control, without saying so? What we mean by holistic is that we cover the whole chain of transmission from the upstream stage where you find the risk-free interest rate, where you find the sovereign yields, to the downstream aspect of the credit terms. Financing conditions are defined by a holistic and multifaceted set of indicators, spanning the entire transmission chain of monetary policy from risk-free interest rates and sovereign yields to corporate bond yields and bank credit conditions. Weekly schedule of public speaking engagements and other activities Friday, 02 April 2021 - Sunday, 11 April 2021 Friday, 02 Apr 2021 Event: ECB Public Holiday - Good Friday Contact: In urgent cases, media representatives can contact ECB Global Media Relations on +49 69 1344 7455 E-mail: media@ecb.europa.eu Last modified: 1 April 2021, 18:20 CET Sunday, 04 Apr 2021 We continue to stand ready to adjust all of our instruments, as appropriate, to ensure that inflation moves towards our aim in a sustained manner, in line with our commitment to symmetry. Conferences & seminars; Media contacts; PRESS RELEASE. The start of vaccination campaigns across the euro area is an important milestone in the resolution of the ongoing health crisis. Second, net purchases under our asset purchase programme (APP) will continue at a monthly pace of €20 billion. We want to look at the entire yield curve and when it comes to mind that the ten years sovereign yield is one that is often referred to, it is not the only one. Preserving favourable financing conditions over the pandemic period for all sectors of the economy remains essential to underpin economic activity and safeguard medium-term price stability. From youtube.com. So, for all these reasons that are, we believe, temporary, technical, as I have just tried to explain, we will see through that. One thing that I will say is that the big difference if you will between the Biden stimulus, which as I said, debated, voted by the two houses, signed into law, cheques in the mail and our massive fiscal stimulus here in Europe is that there is a bit of a lag time between the two. Europe is delivering in that respect, but with governments in the various member states. But clearly we are not there, there are lots of issues that need to be addressed. Looking ahead, the ongoing vaccination campaigns, together with the gradual relaxation of containment measures – barring any further adverse developments related to the pandemic – underpin the expectation of a firm rebound in economic activity in the course of 2021. In these conditions, preserving favourable financing conditions over the pandemic period remains essential. What's important is that actually financial institutions, those that provide financing to the economy, actually use those rates to determine the credit terms that they are then going to offer. On the basis of the commitment we made to preserve favourable financing conditions, that determines the decision that is made by the Governing Council. The Governing Council recognises the key role of the Next Generation EU package and stresses the importance of it becoming operational without delay. Introductory statement by Ms Christine Lagarde, President of the European Central Bank, and Mr Luis de Guindos, Vice-President of the European Central Bank, Frankfurt am Main, 21 January 2021. And your question actually prompts me to once again to reiterate the fact that it needs to be rolled out. We still have a lot of uncertainty about, you know, the current pandemic, about its development, about the lockdown measures, the containments, their length, and our forecast, our projection from December, which we believe is still valid, was predicated on lockdown measures continuing through the whole of the first quarter of 2021, and vaccination progressing very gradually. My colleague on the Board, Fabio Panetta, has reported to the European Parliament on that particular matter, and he will report again I’m sure when we have conclusions from that report. Turning to the monetary analysis, the annual growth rate of broad money (M3) stood at 12.5 per cent in January 2021, after 12.4 per cent in December and 11.0 per cent in November 2020. Lagarde comments at ECB press conference. By Reuters Staff. Euro area annual inflation remained unchanged at -0.3 per cent in December. But you know, domestic pressure, domestic prices will continue to be subdued, owing to weak demand, owing to labour market slack, and the euro exchange rate appreciation. Are you currently, given the social restrictions, it seems quite clear are going to last until Easter, in a lot of countries, are you expecting a contraction? This assessment is broadly reflected in the baseline scenario of the March 2021 ECB staff macroeconomic projections for the euro area. That clearly includes a multiplicity of rates that we all look at as well. We have still a good volume of redemptions this coming Monday. In addition, the flexibility of purchases over time, across asset classes and among jurisdictions will continue to support the smooth transmission of monetary policy. Equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation. For media queries, please contact Andrea Zizola, tel.

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