The best way for monetary policy to navigate the uncertainty caused by the war in Ukraine, rising energy and food prices and ongoing supply bottlenecks is to emphasise the principles of optionality, gradualism and flexibility, ECB president Christine Lagarde said Thursday.
“Optionality means that we are prepared to react to a range of scenarios, and the course we take will depend on the incoming data,” she said.
“Gradualism means that we will move carefully and adjust our policy as we receive feedback on our actions. Flexibility means that we will use our toolkit to ensure that our policy is transmitted evenly across all parts of the euro area,” she said.