LIVE: ECB president Lagarde speaks to reporters

Rates held despite intense debate

The Governing Council unanimously decided to keep the three key ECB interest rates unchanged after extensively debating a potential hike, opting to wait six weeks for clearer data on the conflict's economic impact.

Data-dependent patience

Lagarde described the decision as "informed but based on insufficient information," emphasizing a "meeting by meeting" approach with no pre-commitment to any specific rate path until energy price developments become clearer.

Avoiding the 2011 policy error

The Council remains mindful of historical precedent, seeking to avoid the mistake of hiking too early only to reverse course later due to pushing the economy into stagnation.

Shifting away from baseline

The economy is moving away from baseline projections toward scenarios with higher inflation and lower growth risks, though the exact position between baseline and severe scenarios remains uncertain.

Stagflation explicitly rejected

Lagarde dismissed "stagflation" characterizations as inappropriate for current conditions, contrasting today's monetary framework with the 1970s era of persistent inflation and high unemployment.

Energy shock remains primary threat

The key concern is the duration, depth, and propagation of potential energy price increases that could spill over into wages and long-term inflation expectations.

Credit standards tightening

Bank lending standards tightened in Q1 as banks grew more concerned about customer economic risks, while demand for corporate loans decreased slightly and mortgage growth slowed to 3%.

Liquidity remains ample

Despite central bank reserves halving to €2.6 trillion from 2022 peaks, the ECB confirmed abundant liquidity with no shortages, while Vice President de Guindos affirmed banking sector resilience.

Private credit risks under review

The ECB plans to dedicate a full chapter of its upcoming Financial Stability Review to assessing liquidity risks and interlinkages in the private credit sector, which lacks central bank access.