No need for big ECB tightening as inflation to hold at target, Lagarde says

• European Central Bank President Christine Lagarde said on Monday that there is no need for big monetary policy tightening in the eurozone as inflation is set to fall back and could stabilize around 2%. 
• Pointing to mounting inflation risks, the ECB opened the door last week to an interest rate hike later in 2022 and said that a March 10 meeting will be crucial in deciding how quickly the central bank would wind down its long-running bond-buying scheme, a cornerstone of its stimulus efforts. 
• However, Lagarde appeared more cautious on Monday, arguing that high inflation is unlikely to get entrenched and warning that high energy prices, the biggest driver of inflation, are likely to be a drag on prices further out. 
• Lagarde told a European parliamentary hearing that the chances have increased that inflation will stabilize at the target, highlighting that there are no signals that inflation will be persistently and significantly above the target over the medium term, which would require measurable tightening. 
• Lagarde said that the eurozone economy was not suffering from the sort of overheating others were experiencing, noting that this increases the likelihood that the current price pressures will subside before becoming entrenched, enabling the ECB to deliver on its 2.0% target over the medium term.

(Source: Reuters)