FRANKFURT, April 14 (Reuters) - The euro zone's economy is somewhere between the European Central Bank's baseline and adverse scenarios, ECB President Christine Lagarde said on Bloomberg TV on Tuesday
ECB has not made its mind up on rates, Lagarde says
Uncertainty Surrounds ECB Rate Decisions Amid Iran War Fallout
FRANKFURT, April 14 (Reuters) - The European Central Bank has not made its mind up on whether to raise interest rates as the fallout of the Iran war on the euro zone's economy is still unclear, ECB President Christine Lagarde said on Bloomberg TV on Tuesday.
Investor Speculation on Rate Hikes
Investors have been speculating on ECB rate hikes as soon as this month as the closure of the Strait of Hormuz pushes up fuel prices in the energy-importing euro zone, threatening to trigger another surge in inflation.
Lagarde’s Response to Market Expectations
But Lagarde said it was still too early to draw conclusions and appeared to rein in colleagues who have ventured predictions about possible rate increases.
Lagarde’s Statement on Decision-Making
"It doesn't predicate that we'll go in one direction or the other and it certainly does not determine a rate path that I can confirm today," Lagarde said of the situation in Iran.
"Any of the colleagues who are confident that it's going to be one way or the other don't know, honestly."
ECB Economic Projections and Scenarios
The ECB published baseline projections last month under which the hit from the Iran war would be short-lived.
Adverse and Severe Scenarios
But it added an adverse scenario that assumes a much sharper increase in energy prices, greater uncertainty and international spillover, and a severe one in which inflation rises to 4.8% next year.
Lagarde’s Assessment of the Current Situation
Lagarde said the economy was "between the baseline and the adverse" scenario -- comments that traders may take as suggesting a rate hike was not imminent.
Lagarde’s Leadership and Commitment
Asked about the prospect of resigning early, Lagarde likened herself to a captain who won't abandon the ship when there are clouds on the horizon.
"This captain is not going to leave the ship, because I see clouds," she said.
(Reporting by Francesco Canepa; Editing by Alison Williams and Keith Weir )
