First of all, I want to get your thoughts on the macro picture, because
to me, the IMF, it sounded very gloomy. I mean, they say all the downside risks
are obviously stunted but tilted to the downside and a lot of things can go
wrong. Are you as pessimistic or maybe you feel
may not be as bad? I think so.
I can report the job within. What's the difference between optimism
and pessimism? What is it?
I look at the same glass of water and one pessimist sees pessimists see half
empty glass and optimistic half full glass.
Right. But it's anyway.
Glass is not full. There is a certain amount of water.
So I see that is similarly said with equity.
About dissipation, about the economy. Yes.
Global economy growth this year is going to be slower than last year.
And much of it comes from the advanced economies, the slower growth.
But on the other hand, economies proved to be more resilient than expected
before they sustain substantial economic shocks.
And for instance, euro area economy growth was revised twice up by the ECB
from zero point five to 1 percent to 1 percent growth for 2023.
And I assume that you would trust your in-house projections better than the
IMF. Well, IMF projections, I would say, kind
of show similar picture for euro area's zero point in growth.
And it was revised up not that much by 0 1
0 point 1 percentage point, but still it was revised up.
So economies proved to be more resilient.
But growth this year going to be slower than last year.
And you say the joke of the glass half full or empty.
But the joke the joke is a joke, but also the glass has repercussions.
They're not a joke for your monetary policy.
So what are the implications for. There's a meeting coming up in May.
The idea is that the ECB will continue to hike.
Is it your idea that the ECB will continue, should continue to hike?
You're not targeting the economic growth.
You are targeting the inflation rate. And what we see about inflation.
Yes. The headline inflation is decreasing
substantially, but it's on account of it.
Reduce the energy price shocks. Right.
What we also do see this is very sticky core inflation.
It's peaking at the moment and maybe next month or a
couple months later, it will reach its peak.
But what can be said? What can be said about core inflation?
But it is ticking and it's trickier than it was four before.
And it's it's it's it's driving the thinking in terms of the monetary policy
decisions. So that means when you set up the
governing council and made you will ask for how much, 25 basis points.
It means that we shouldn't pause in our midway.
We did that along kind of quick walk by hiking interest rates
and we hiked quite a bit in less than one year.
For the record. Yes, exactly.
But he had not done. So inflation is still there and it is
broad based. It's stubbornly high is too high for too
long. And we need to fight it.
So I think I believe we need to become a force in our May meeting, but that with
25 or 50. If you if you want to ask, let's see.
We depend on data. Let's see the data when we have at the
table of his decision. But just to make it clear, because
there's an important divergence perhaps here in the debate is
a debate, should we hold or go for 25? Or is a debate?
We're obviously not going to stop. It's about the size of this rate.
I think it's a debate. Debate how to cage the inflation to
where it should be. How to cage inflation to 2 percent of
its target and medium term. So if I understood your question right.
And that means therefore it's about the magnitude of the height, not the
trajectory. I don't think it's only about the magic
magnitude. It's all.
It's also about the determination of the central bank to bring inflation back to
its target in the medium term. And answer.
Now we head into a very intellectual debate, which is fascinating but also
makes your life very difficult. What we're seeing is almost this
dichotomy between the headline inflation as soon as energy prices go down.
Headline inflation follows down. That's the target that you pursue the
close to 2 percent, but core inflation is sticky.
So what number do you look at the target that you pursue or actually what we
know, the inner dynamics, the reaction, the function, I think is very well
defined in our monetary policy statement.
We do look we do look at the data, economic and financial data at the
moment of the decision. We do it with dynamics of the underlying
inflation and we do have at the efficiency of transmission of monetary
policy decisions. So it's not only one data, one number or
another number, is it? But do you worry about the separation
that we're seeing in the data? Will they converge or actually, is this
a new playbook where potentially you see them heading to different ways?
You might have a certain period of time worry, you know, core inflation, it's
moving in a different direction the moment core inflation is growing while
headline inflation is falling. But we very well understand the reasons
behind this. This is energy price dynamics and that's
what drives the headline inflation down. But inflation without food and energy
competence is going up. And that's why.
And obviously the big question here is when the gap was here, your fellow
colleagues in the Governing Council are here.
The market wants to have confidence that this is the central bank that will
achieve its target because this is Shery Ahn reputation is built on this.
Do you have confidence in them that you will bring in?
This consensus is not easy to set monetary policy for so many different
economies. Absolutely.
I have confidence that we will do our job and macroeconomic projections.
I mean, they very well indicate that we are on the right path.
We are making right steps. Inflation for 2025, it's definitely goes
down, as you see from macroeconomic projections.
Yes, it's still a little bit above 2, but we still count for some room for
maneuver and and inflation expectations. How well anchored.
So I think we do a great job. And I left the hardest question for
well, the last one and obviously our 50 basis points, is that something you
don't even contemplate? And it came until the debate at one
point, then died out a little. Is that something that you say, well,
we're not going there. At least I don't contemplate that
figure. I think we should be open to all
options. Right.
25, 50. But let's wait see.
Let's wait. Minute left for me.
And May data, you'll see inflation for 4 for April.
The preliminary estimate for inflation, you'll see GDP growth for first quarter
this year. All of our data and then will we take
decision?