FRANKFURT, March 19 (Reuters) - The European Central Bank kept its key interest rate at 2% on Thursday and warned that the war on Iran was clouding the outlook for growth and inflation in the euro zone.
Following are highlights of ECB President Christine Lagarde's comments at a news conference after the policy meeting.
ON THE OUTLOOK FOR GROWTH
"The risks to the growth outlook are tilted to the downside, especially in the near term."
ON DISCUSSIONS WITHIN THE GOVERNING COUNCIL
"I would characterise the
overall mood of the group as being calm, being determined, and being laser-focused." "There was no range of views. It was a unanimous decision that was taken not to move rates at all."
NOT SAYING IN GOOD PLACE
"I'm not saying that we are in a good place. We are well positioned... I think we are both well positioned and well-equipped to deal with the development of a major shock that is unfolding."
ON WHAT THE ECB WILL FOCUSED ON
"We will be particularly attentive to developments in all commodity markets. We will be particularly attentive to supply bottlenecks. We will be particularly attentive to selling price expectations of firms... We will be particularly attentive to all demand indicators, be it PMIs, consumer confidence, etc. We will be particularly attentive to wage trackers."
ON UNDERLYING INFLATION
"Indicators of underlying inflation have changed little over recent months and remain consistent with our 2% medium-term target."
ON UPSIDE RISKS TO INFLATION
"The risks to the inflation outlook are tilted to the upside, especially in the near term.
"A prolonged war in the Middle East could lead to a larger and longer-lasting upward shift in energy prices than currently expected, raising euro area inflation further. This could be reinforced and become more persistent if inflation expectations and wage growth were to rise in response."
GROWTH UNDERPINNED BY SERVICES
"(Growth) was underpinned mainly by services.
"Staff still see private consumption as the main driver of growth over the medium term."
MIDDLE EAST WAR WEIGHING ON CONFIDENCE
"The war in the Middle East is disrupting commodity markets and weighing on real incomes and confidence."
ON THE ECONOMIC ENVIRONMENT
"The external environment remains challenging, including in light of volatile global trade policies.
"The war in the Middle East is disrupting commodity markets and weighing on real incomes and confidence. This has led to a downward revision of consumption and investment in the baseline staff projections, especially for 2026.
"The impact would be even more pronounced in alternative scenarios, with a more severe and prolonged energy shock."
ON APPROACH TO MONETARY POLICY
"We will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, our interest rate decisions will be based on our assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation."
TARGETED ENERGY PRICE RESPONSES
"Any fiscal responses to the energy price shock should be temporary, targeted, and tailored."
(Reporting by Reuters Global News Desk)
