BOLOGNA, Italy, March 5 (Reuters) - The European Central Bank has no pre-set stance as regards to geopolitical tensions from the conflict in the Middle East and will decide monetary policy on a "
ECB has no preset response to Middle East war, Lagarde says
ECB’s Approach to Middle East Conflict and Monetary Policy
By Giulio Piovaccari
Lagarde’s Statement on Policy Flexibility
BOLOGNA, Italy, March 5 (Reuters) - The European Central Bank will carefully analyse the impact of the war in the Middle East, taking its monetary policy decisions on a "meeting-by-meeting" basis and without any preset stance, President Christine Lagarde said on Thursday.
The ECB will take its decisions "in view of all the data that we can harness, and that we can analyse, and that we can scrutinize with sufficient confidence," she said.
No Preset Monetary Policy Stance
There is no "preset pace for our monetary policy stance," Lagarde said during a Q&A session after delivering a speech at the Johns Hopkins University in Bologna, Italy.
"And I think that if you bring these two elements together, it places the ECB and the euro system in a good position to monitor very carefully and to try to understand what the consequences of the current shocks will be in the future," she added.
Impact of Middle East Conflict on Euro Zone
The U.S.-Israeli war on Iran, which has spread to other countries in the Gulf, is threatening to drive up inflation and hit sluggish euro zone growth by making energy more expensive and disrupting supply chains.
Pre-Conflict Policy Position
Prior to the attacks, Lagarde and other ECB policymakers had repeatedly said that the central banks's interest rate policy was in a "good place".
Risks of Prolonged Conflict
On Thursday, three ECB policymakers warned that a prolonged, wider war could push up inflation, both present and expected.
ECB’s Readiness for Economic Shocks
Strong Starting Position
Lagarde said the ECB had the advantage of facing potential shocks to growth and prices from a good starting point.
"I think that when you face additional shocks, additional uncertainty, it's certainly more convenient and more appropriate to be in a good place than to be in a less good place."
Lagarde’s Mandate and Speculation
The ECB president, who has been fighting speculation about a possible early exit, also reiterated her mandate at the euro zone's central bank ends in 2027.
(Reporting by Giulio Piovaccari, editing by Alvise Armellini)
