© Reuters. FILE PHOTO: European Central Bank (ECB) President Christine Lagarde in Frankfurt, Germany, March 12, 2020. REUTERS/Kai Pfaffenbach/File Photo/File Photo/File Photo
FRANKFURT, July 22 (Reuters) – The European Central Bankpledged on Thursday to keep interest rates at record lows foreven longer to help sluggish inflation in the euro zone riseback to its elusive 2% target.
Following are highlights of ECB President Christine Lagarde’s comments at a news conference after the policy meeting.
PRESERVING FAVOURABLE FINANCIAL CONDITIONS
“The recovery in the euro area economy is on track. More and more people are getting vaccinated and lockdown restrictions have been eased in most euro area countries. But the pandemic continues to cast a shadow, especially as a growing source of uncertainty. Inflation has picked up. Although this increase is expected to be mostly temporary. The outlook for inflation over the medium term remains subdued. We need to preserve favourable financing conditions for all sectors of the economy over the pandemic period. This is essential for the current rebound to turn into a lasting expansion, and to offset the negative impact of the pandemic on inflation.”
DELTA VARIANT RISK
“The reopening of large parts of the economy is supporting a vigorous bounce back in the services sector. But the Delta variant of the coronavirus could dampen this recovery in services, especially in tourism and hospitality.”
“As the economy recovers, supported by our monetary policy measures, we expect inflation to rise over the medium term although remaining below our target.”
RECOVERY SUPPORTS INVESTMENT
“The ongoing recovery in domestic and global demand is boosting optimism among businesses this supports investment. For the first time since the start of the pandemic our bank lending survey indicates that funding of fixed investment is an important factor driving the demand for loans to firms.”
STRONG GROWTH IN Q3
“The economy rebounded in the second quarter of the year and as restrictions eased is on track for strong growth in the third quarter.”
“The outlook for inflation over the medium term remains subdued.”
(Reuters Global Newsdesk)
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