European Central Bank President Christine Lagarde reiterated language first used last week that officials will act as needed both on inflation and on threats to the banking system. 

In comments to lawmakers in Brussels, she stuck to the same wording as employed in last Thursday’s decision to raise interest rates by a half point and not to provide a signal on further moves. 

“We are monitoring market developments closely and stand ready to respond as necessary to preserve price stability and financial stability,” Lagarde told lawmakers in the European Parliament on Monday (Mar 20). “The euro-area banking sector is resilient, with strong capital and liquidity positions. In any case, the ECB’s policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed.”

Lagarde also repeated a statement release on Sunday to “welcome the swift action and the decisions taken by the Swiss authorities” over Credit Suisse. 

The ECB president spoke less than a week after officials raised rates even as concerns about the health of banks rocked the global financial system. 

Some policymakers have argued that tightening will probably need to continue. Latvian central-bank chief Martins Kazaks told Bloomberg in an interview published on Monday that borrowing costs must rise further “if the baseline scenario holds and market volatility calms down and does not derail the scenario.” 

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By contrast, his Greek colleague Yannis Stournaras warned on CNBC Europe that the ECB is now “close to the end of the tightening cycle” and that “rate hikes are mostly now a story of the past.” 

The ECB’s latest economic projections – which were finalised before the failure of Silicon Valley Bank sent ripples through the financial system and UBS Group agreed to take over embattled rival Credit Suisse – see inflation closer to the central bank’s 2 per cent target by 2025, but still lingering above it. BLOOMBERG