Lagarde Says `Highly Accommodative Policy' Is Warranted by ECB

The transcript discusses the euro area's economic risks, particularly low inflation, and the need for accommodative monetary policy. It highlights the positive impact of unconventional policies but warns of potential side effects. The global low inflation environment poses strategic questions for central banks, requiring a deeper understanding of inflation dynamics and robust policy frameworks. Central banks face new challenges, including climate change and technological disruptions, necessitating forward-looking monetary policies. The ECB's role in financial stability has grown, with significant progress in bank supervision and risk reduction.

What is the primary reason for the euro area's near-term economic risks?

• Strong currency value

• High inflation rates

• External factors

• Internal political instability

Why does the Governing Council support a highly accommodative policy?

• To bring inflation closer to the target

• To strengthen the euro

• To increase interest rates

• To reduce government debt

What strategic challenge do central banks face in a low inflation environment?

• Enhancing understanding of inflation dynamics

• Expanding fiscal policies

• Reducing interest rates further

• Increasing currency reserves

What new responsibility has the ECB taken on in response to financial challenges?

• Managing national budgets

• Overseeing the European Banking Supervisor

• Setting global interest rates

• Regulating cryptocurrency markets

How have bank balance sheets improved according to the ECB's supervision?

• Reduced equity ratios

• Strengthened capital buffers

• Decreased capital buffers

• Increased non-performing loans