The President of the European Central Bank (ECB), Christine Lagarde, assured Wednesday that it will pass "
some time
" before the institution tightens its monetary policy, noting that inflationary pressures remain low in the euro area against the backdrop of Covid-19 pandemic.
Read also: ECB and political authorities: the need for a new balance
The ECB is pursuing a very expansive policy intended to support loans to households and businesses.
It has recently stepped up the pace of its purchases of public and private debt, in order to counter tensions in the bond market created by fears of an overheating economy, especially in the United States.
“
The next worry,
” Lagarde said, will be “
when yields rise because the economy picks up, because consumers are consuming, investors are investing and because hopefully they will put some pressure on prices. in our economy,
”she said in an interview with Bloomberg TV.
Sustainably higher prices usually force central banks to tighten the monetary screw, by raising their short-term rates or reducing or ending interventions in the debt market.
The Frenchwoman estimated that it will take "
still a certain time before asking (if) we should tighten
" the monetary course, without being more precise.
In particular, she underlined the
remaining
“
distance
” from the inflation target set by the ECB, close to 2%.
Like the recent rise in bond yields, financial markets are looking to anticipate what the future action of central banks will be.
"
The markets can test us as much as they wish
", underlined Ms. Lagarde, who recalled that the ECB is "
riveted on its mandate
", to which the inflation objective is attached.
However, the markets will not be caught off guard once the time has come for the end of monetary largesse.
"
We will give sufficient notice
," said Christine Lagarde, to avoid panic movements as in the past.
Read also: ECB: the Covid-19 crisis has boosted the demand for cash
In 2013, the boss of the venerable US Federal Reserve, Ben Bernanke, uttering a seemingly innocuous sentence in May 2013 to announce that the Fed was going to reduce ("
tap
") its purchases of bonds intended to support the American economy, had provoked panic in world markets.