ECB's Lagarde Says Economic Risks Are `Broadly Balanced'

The video discusses the impact of higher energy prices and base effects on inflation, noting that these factors should diminish by early 2022. It highlights near-term inflationary pressures due to stronger demand and supply chain costs, but notes that weak wage growth and euro depreciation will keep price pressures subdued. The medium-term outlook expects inflation to rise, supported by monetary policy, but remain below target. The risk assessment sees balanced economic risks, with potential for stronger growth if consumer spending increases or the pandemic situation improves, but warns of underperformance if the pandemic worsens or supply shortages persist.

What are some factors contributing to the rise in energy prices and inflation?

• Permanent tax increases

• Increased oil production

• Base effects from previous oil price falls

• Strong wage growth

Which factor is likely to keep price pressures subdued in the near term?

• Strong consumer demand

• Rapid economic recovery

• Weak wage growth

• High supply chain costs

What is the expected trend for inflation over the medium term?

• It will stabilize at the target

• It will decrease significantly

• It will exceed the target

• It will remain below the target

What could lead to stronger economic activity than expected?

• Persistent supply shortages

• Faster pandemic improvement

• Higher inflation rates

• Increased consumer savings

Which factor could cause economic growth to underperform expectations?

• Rapid consumer spending

• Increased production

• Intensified pandemic

• Improved supply chains