European Central Bank (ECB) President Christine Lagarde reiterated on Saturday that stagflation is not the ECB's baseline. She conceded that "the unusual degree of uncertainty could mean a combined slowdown in growth amid high inflation," but added that economic growth has not considerably slowed down and that wage increase is not currently pushing prices up.
Speaking about the possible consequences of higher interest rates, Lagarde reassured that the euro area is "certainly more robust" today than it was ten years ago. She pointed to banking supervision and the progress toward banking union as factors of strength, and recalled the common fiscal response and solidarity shown by the countries of the Eurozone during the COVID-19 pandemic.
