Comments from Lagarde in the ECB Q&A:
- ECB discussed whether risks were closer to balanced
- ECB hopes to decide on strategy review in November/December
- ECB policy decisions will be independent from review
- Tiering is operating extremely well
- There is no discussion at this time to change tiering multiple
- Tiering has proven to be effective, no question about it
- Governments with fiscal space should be ready to act
- If growth does not pick up, we have to decide on which part of the yield curve we want to operate on and that determines tool
- Two countries with fiscal space are exploring how to expand more fiscally with domestic budget rules
Euro one-month volatility hit a record low as she was speaking.
The fall in the euro through the press conference shows that the market was leaning towards something hawkish, at least on negative rates. Instead she was pushing governments to spend and not offering any hint about a hawkish shift.