March 17, 2022 (MLN): The challenges facing monetary policy are changing and the euro economy is unlikely to return to the same inflation dynamics it saw before the pandemic, said Christine Lagarde, President of the European Central Bank (ECB) today.

The ECB’s response will be guided by optionality, gradualism, and flexibility.

ECB quoted President Christine on Twitter which said, “We have begun adjusting policy so that, when the necessary conditions are satisfied, we can take additional steps towards policy normalization.”

“We are aware of the underlying risks caused by the war and the uncertainty it is creating in all directions.”

All ECB’s monetary policy decisions in the months to come will necessarily be informed by the economic fallout from the war and be data-dependent, she added.  

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