Christine Lagarde expects eurozone economy to deteriorate

European Central Bank President Christine Lagarde has warned of the detrimental consequences of the conflict in Ukraine and urged governments and investors to make funding available to strengthen Europe’s resilience, Report informs referring to Bloomberg.

“The longer the war lasts, the greater the costs are likely to be,” she said on March 30 in Cyprus. “Europe needs a plan to ensure that the necessary investment comes online as quickly and smoothly as possible, with public and private finance reinforcing each other.”

Lagarde said Russia’s invasion poses “significant risks to growth” and has introduced “considerable uncertainty” into the economic outlook. At the same time, sticky energy costs, increasing food prices and persistent bottlenecks “are likely to take inflation higher,” she said.

“The best way that monetary policy can navigate this uncertainty is to emphasize the principles of optionality, gradualism and flexibility,” Lagarde said.

Policy makers decided to end an emergency asset-purchase program this month and said regular bond-buying could be halted in the third quarter unless there are fundamental changes in the euro area’s inflation outlook.