On the basis of the general outlook, the normalization process of European monetary policy will continue in a determined and sustained way.
This is what the president of the European Central Bank, Christine Lagarde, underlined at the Sintra forum, underlining however that
"given the uncertainty we are facing, the step towards normalization of rates cannot be defined ex ante", but will be done "gradually". and optionality ".
However, this conditional approach, adds the president of the ECB, "must not be confused with a postponement of normalization".
According to the Eurotower, the "rapid and disordered" response of spreads in some countries, "not justified by economic fundamentals", brings to light
the risk of fragmentation that the ECB wants to avoid as it proceeds with normalization
.
There are two ways: "to use flexibility" from 1 July in reinvestments in the expiry of the Pepp program, and to put in place a new anti-fragmentation instrument that must be "effective, proportionate and have sufficient guarantees to preserve the impetus of the States towards a budgetary policy solid ", explains the president of the ECB at the Sintra forum.
"The euro area is facing a complex combination of shocks that are reducing growth and pushing inflation up", so
"it is imperative" that governments do "their part to address the risks to the economic outlook"
, providing "targeted and temporary support" and, in the medium term, following a framework of rules that looks at "debt sustainability and macroeconomic stabilization".