ECB's Lagarde says its too early to talk about PEPP exit
(Kitco News) - ECB's Lagarde has kicked off her press conference with a statement about how the ECB feel the state of the economy is performing at the moment.
She said "In the first quarter of the year, euro area real GDP declined further, by 0.3 percent, to stand 5.1 percent below its pre-pandemic level of the fourth quarter of 2019. Business and consumer surveys and high-frequency indicators point to a sizeable improvement in activity in the second quarter of this year.".
From a base metals perspective, she noted that "manufacturing production remains robust, supported by solid global demand, although supply-side bottlenecks could pose some headwinds for industrial activity in the near term. Indicators of consumer confidence are strengthening". We have seen from the latest EU PMI reports that purchasers are noting that prices are increasing for raw goods, materials, and shipping costs.
In regards to growth, the ECB forecast GDP growth at 4.6 percent in 2021, 4.7 percent in 2022 and 2.1 percent in 2023.
Inflation is the hot topic at the moment and the ECB foresees annual inflation at 1.9 percent in 2021, 1.5 percent in 2022 and 1.4 percent in 2023. The statement said "compared with the March 2021 ECB staff macroeconomic projections, the outlook for inflation has been revised up for 2021 and 2022, largely owing to temporary factors and higher energy price inflation. It is unchanged for 2023". They did however note that the strength in the euro dampened some of the inflationary pressures.
When talking about the PEPP Lagard said that exit talk will come in due course and it is too early to talk about it now. The BoE and BoC have already made moves now we need to see who will blink first the FED or ECB?