Further remarks by Lagarde
- The conditions to raise rates are very unlikely to be satisfied next year
- Energy prices are set globally, supply issues cannot be remedied by monetary policy
- Tighter policy would only exacerbate contractionary effect on the economy
- ECB does not overreact to supply-driven cost-push shocks that will not persist into the medium-term
She's conceding that monetary policy has its limitations and will do almost nothing to address the root of the inflation problems, and she is not wrong in that regard.
However, for the rising cost pressures to fade/dissipate, a synchronised global recovery is the main prerequisite and it is one that is still facing some doubts at the moment.
As such, one can't really rule out the risks of persistently high inflation - not even Lagarde, as much as she wants to at the moment. But I guess only time will tell.
