In her opening statement, Lagarde emphasized that while the economy remains weak in the first quarter, production levels are still low, especially in energy-intensive industries. However, she expects a pickup in the coming quarters. She also highlighted the need for governments to continue rolling back support and noted that the tightness in the labor market is gradually declining.
Lagarde pointed out that food and energy prices are falling, but goods services price inflation remained high in March at 4%. She mentioned that more recent indicators suggest a further moderation in wage growth and that inflation is expected to decline to the target next year. Despite these positive developments, she cautioned that risks to economic growth remain tilted to the downside.
Lagarde explained that growth could be higher if inflation decreases more than expected, but warned that inflation could turn out higher if wages climb or profit margins remain elevated. She indicated that if there is greater confidence in the economic outlook, it would be appropriate to lower rates but stressed that they are not committing to a particular rate path.
