Brussels, (EFE).- The president of the European Central Bank (ECB), Christine Lagarde, said Monday that the eurozone issuer “is ready to respond as necessary to preserve price stability and financial stability in the area of the euro” after the banking crisis in the US that affects Europe.
“We are closely monitoring events in the market and stand ready to respond as necessary to preserve price stability and financial stability in the euro area. The eurozone banking sector is resilient, with strong capital and liquidity positions, ”he said in a debate with the European Parliament’s Economic Affairs committee.
He added that, in any case, the ECB is “fully equipped to provide liquidity support to the eurozone financial system if necessary and preserve the smooth transmission of monetary policy” from the issuer.
Lagarde thus influenced the message of calm launched last week by the issuer after the bankruptcy of Silicon Valley Bank (SVB) and other US financial institutions, which caused a drop in the prices of European banks and aggravated the difficulties of the Swiss Credit Suisse , which will be acquired by UBS with the endorsement of the Executive and the Swiss central bank after an agreement sealed this weekend.
quick decision making
The ECB president welcomed the “quick action and decisions” taken by the Swiss authorities which, she considered, “were instrumental in restoring orderly market conditions and ensuring financial stability.”
In terms of monetary policy, the subject of parliamentary debate, Lagarde recalled that the ECB expects inflation to “continue too high for too long”, which is why the institution’s Governing Council decided to increase interest rates by another 50 basis points next week. past, up to 3.5%.
interest rates
“The current high level of uncertainty”, he added, reinforces the importance of the approach adopted by the ECB to make its future decisions on interest rates “depending on the data” that become known about the inflation outlook, the dynamics of core inflation and the transmission of monetary policy.
“Inflation rates will continue to be our first tool to set the monetary policy position,” Lagarde said.
The ECB president pointed out, however, that the recent “tensions (in the financial markets) imply additional uncertainty” regarding their inflation and growth projections.
The latest, issued before these tensions arose, revised GDP growth in the euro area upwards, to 1% this year, and 1.6% in both 2024 and 2025; while they revised downward the inflation forecasts to 5.3% this year, 2.9% next and 2.1% in 2025.