Lagarde says ECB will do what is needed to secure financial stability

Bloomberg

The European Central Bank will do everything in its power to safeguard the stability of prices and the financial system in the euro area, according to President Christine Lagarde.
While it’s too early to judge the overall economic impact of Russia’s invasion of Ukraine, persistent uncertainty will likely drag on investment and consumption and impede growth, Lagarde told journalists after a meeting with euro-area finance ministers in Paris. Inflation is likely to be boosted further by rising energy costs.
“The ECB stands ready to take whatever action necessary within its responsibilities to ensure price stability and financial stability within the euro area,” she said. That includes ensuring that cash and liquidity will be available, and using optionality and flexibility in setting monetary policy.
In the days and weeks preceding Russia’s attack, the ECB had been paving the way for a decision at its March 10 meeting on how quickly to wind down bond purchases in the face of record inflation rates. That task has become more challenging as officials will have to weigh the economic impact of the war and the sanctions that western leaders imposed in response.
According to estimates presented by ECB Chief Economist Philip Lane during this week’s meetings, the conflict may reduce euro-area output by 0.3 percentage point to 0.4 percentage point this year.
Lagarde said central-bank staff are currently updating their estimates, and “any number floating around are premature” as the situation “is evolving constantly as we speak.”
“The ECB is closely monitoring the evolving situation,” she said. “It will consist of a comprehensive assessment of the economic outlook, which will include all the latest development and which will form the basis of our policy meeting.”