Lagarde: Anyone Thinking ECB Is Pivoting Is Wrong

tweet at 8:54am: MORE ECB'S LAGARDE: GROWTH EXPECTED TO BE 'SUBDUED' NEXT YEAR #ecb #interestrates #eurozone #inflation #monetarypolicy tweet at 8:51am: ECB PRESIDENT CHRISTINE LAGARDE: DETAILED PARAMETERS OF REDUCTION IN REINVESTMENT OF APP ASSETS TO BE ANNOUNCED AFTER FEB MEETING #ecb #interestrates #eurozone #inflation #monetarypolicy tweet at 8:54am: ECB's Lagarde: "Inflation remains too high and likely to stay higher. Food price inflation and underlying price pressures across the economy have strengthened and will persist for sometime." #Forex #Trading tweet at 8:56am: Lagarde: Weaker Economy Could Lead to Somewhat Higher Unemployment Rate Lagarde: Job Creation to Slow Lagarde: Weaker Economy Could Lead to Somewhat Higher Unemployment Rate Lagarde: Unemployment Could Rise Over Coming Quarters tweet at 8:58am: Lagarde: Fiscal Measure Could Exacerbate Inflationary Pressures Lagarde: Energy Aid Must Be Temporary, Targeted, Tailored Lagarde: Govts Should Swiftly Implement Nextgen EU Plans

The outlook for the euro area has deteriorated somewhat, with weaker growth and higher and more persistent inflation than envisaged in the September 2022 ECB staff macroeconomic projections.[ 1 ] Economic growth was stronger than previously expected over the summer owing to the boost to services activity from the reopening of the economy and from government support measures. However, the ongoing energy crisis, high inflation, elevated uncertainty, the global slowdown and tighter financing conditions are all dragging down economic activity and have already led to a sharp slowdown in real GDP growth in the third quarter of 2022. Staff now expects a short-lived and shallow recession in the euro area at the turn of the year. As the economic consequences of the war in Ukraine unfold and fuel the strong inflationary pressures, consumer and business confidence have remained subdued, while real disposable incomes are being eroded and soaring cost pressures are curtailing production, especially in energy-intensive industries. The negative economic repercussions are expected to be partially mitigated by fiscal policy measures. In addition, high levels of natural gas inventories and ongoing efforts to reduce demand and replace Russian gas with alternative sources imply that the euro area is expected to avoid the need for mandated energy-related production cuts over the projection horizon, although risks of energy supply disruptions remain elevated, in particular for the winter of 2023-24. Over the medium term, as the energy market rebalances, it is expected that uncertainty will decline, and real incomes will improve. As a result, economic growth is expected to rebound, also supported by strengthening foreign demand and the resolution of remaining supply bottlenecks, despite less favourable financing conditions. The labour market is expected to remain relatively resilient to the coming mild recession, reflecting labour hoarding amid still significant labour shortages. Overall, annual average real GDP growth is expected to slow down markedly, from 3.4% in 2022 to 0.5% in 2023, and then to rebound to 1.9% in 2024 and 1.8% in 2025. Compared with the September 2022 projections, the outlook for GDP growth has been revised up by 0.3 percentage points for 2022, owing to positive surprises over the summer, and revised down by 0.4 percentage points for 2023, while it is unchanged for 2024. tweet at 9:50am: ECB Forecasts Assume Exchange Rate Of $1.05 In 2022 ECB Forecasts Assume Exchange Rate Of $1.03 From 2023 To 2025 ECB Forecasts Assume 2022 Oil Price Of $104.6/Barrel ECB Forecasts Assume 2023 Oil Price Of $86.4/Barrel ECB Forecasts Assume 2024 Oil Price Of $79.7/Barrel tweet at 9:54am: ECB Downside Scenario Sees Economy Shrinking 0.6% In 2023 ECB Downside Scenario Sees Inflation At 2% In 2025 https://t.co/BZYavbVeG5 tweet at 9:51am: ECB Forecasts Assume 2025 Oil Price Of $76/Barrel ECB Sees Economic Output Shrinking 0.2% In 4Q22, 0.1% In 1Q23 ECB Sees Euro-Area Inflation Peaking At 10% In 4Q22 ECB Sees Euro-Area Inflation At 2% In 3Q25, 4Q25