Lagarde speech: Restrictive policy stance acts as a safeguard against wage-price spiral

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“Our restrictive monetary policy stance, the ensuing strong decline in headline inflation and firmly anchored longer-term inflation expectations act as a safeguard against a sustained wage-price spiral,” European Central Bank President Christine Lagarde told European Parliament on Monday.

“There are increasing signs of a bottoming-out in growth and some forward-looking indicators point to a pick-up later this year.”

“Wage pressures, meanwhile, remain strong.”

“The current disinflationary process is expected to continue, but the governing council needs to be confident that it will lead us sustainably to our 2% target.”

“Labour cost increases are partly buffered by profits and are not being fully passed on to consumers.”

“We expect inflation to continue slowing down, as the impact of past upward shocks fades and tight financing conditions help to push down inflation.”

EUR/USD showed no immediate reaction to these comments and was last seen rising 0.28% on the day at 1.0850.

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