The official warned that despite the successful development of Covid-19 vaccines, the economies will continue to face "a period of high uncertainty" until enough people are inoculated.
During this period, "the ECB will help ensure that firms and families can access the finance they need" without concerns that "financing conditions will ... tighten prematurely," Lagarde said.
ECB Governing Council Member Francois Villeroy de Galhau said on Monday that the ECB is ready to adjust all instruments and that it "can and must react" to any undue tightening, including considering a deposit rate cut. "So much as the recent yield rise is unwarranted, the ECB must react against it," he stated.
Villeroy affirmed that the bank's first tool is "actively using the flexibility" of the pandemic emergency purchase program (PEPP). He added that forward guidance "could be strengthened to make tolerance for inflation overshoot explicit."