(Bloomberg) — “Massive” U.S. government stimulus is one reason why Europe is on a less aggressive monetary-policy course than the Federal Reserve, according to European Central Bank President Christine Lagarde.
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“Demand here in the euro area is pretty much back to where it was pre-Covid. In the U.S., it’s 30% up,” Lagarde told a news conference Thursday. “Ask yourself why? Because of this massive fiscal stimulus that the U.S. economy has had, unlike the euro area where it’s been more moderate, not excessive.”
Lagarde called on people to “be a little bit cautious” when comparing the two central banks’ policy actions, since they stem from from very different economic environments and data.
The ECB is under increasing pressure to join global peers in tightening policy more quickly in the face of record inflation. In a change of tone, Lagarde on Thursday no longer ruled out a rate hike this year.
Earlier in the day, the Bank of England raised rates for the second straight meeting, while the Fed is also poised to remove stimulus.
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