- ECB is not in a panic mode
- We are clearly now at a turning point
- ECB approach to policy is "perfectly on time", not behind the curve
- We remain data dependent, closely watching wages and inflation expectations
- ECB is turning its back on negative interest rates, moving towards positive territory by end of Q3
- "Out of negative rates" could mean at zero or above zero
- Recovering services activity going into summer will be a counter-force to factors dragging down the economy
- Gradualism is the way to go if inflation expectations are well-anchored
- If there is a surge in demand, then don't have to be as gradual
- But does not think we are in a situation where a demand surge is present
She is mainly hammering home the points she made yesterday. It is clear that there is a collective shift in the ECB towards tightening policy but against the backdrop of a weakening economy, it will remain to be seen how much can they hike rates especially if they only get off the mark in Q3. Lagarde is managing expectations as such by defining what exactly "out of negative rates" could mean.