essentially out of control. the response here is not a formula targeting, like what the bank of new zealand did. the issue here is the level of dovishness versus hawkish this. how dovish are the dovish central banks right now if they cannot affect new zealand-like targeting? nick: certainly, overall, there is still a lot of dovishness, although there is an evolution going on. when you look at the central banks this year worried about slower growth or higher inflation, coming down on the side of let's tackle inflation to raise interest rates. policy rates are still extremely low relative to the rates of inflation. at the end of the day it is not a 1980's paul volcker kind of

situation that we had in the united states. jonathan: thank you. just to reset for people just tuning in. rates changed at the ecb but a ton of guidance. they had to cut their growth forecast. this market behaves like it was reading the statement. initially the bond market was pretty contained. the first line in the statement, asset purchase program's before detailed guidance. they have big and some flexibility, the idea that they can -- then you get down to the rates line and think it more interesting. looking to hike rates in july. september, open the door to a bigger move. then talking about sustained but gradually increases. what is interesting about this rate guidance, and everything could change in the news conference, you having ecb

laying the groundwork for something we have not seen in these european central bank's, a tightening cycle. it is not to me to say whether they can achieve it or not, but not just july, ecb opening the door for september, leaving the door open for doing more than that. tom: the thing that is important to me, i want to do a compare and contrast of the glide path of inflation that ecb sees versus oecd, imf saw a few weeks ago. it's a pretty when i feel moving from 6.8%. we welcome all of you this morning worldwide across europe and america to two days of critical economics, finance, investment. with the ecb, we go right away to the press conference and then to the inflation reported

america. jonathan: looking ahead to that tomorrow morning. what this speaks to is the rate guidance. that seems to be the driving force behind some of this. lisa: it is not the offsets that come with purchases which raises the question of what political incentive there will be to actually engage in a bigger bond purchasing program as they raise rates or whether they will be able to. i go back to the japan market. when you push the grain where traders want to push prices, how successful can you be? that might be the issue facing the parochial region. jonathan: the ecb forecast, 6.8%. coming into this it was 5.81. tom: let's stop here. we have a wonderful guest to drive this forward. 6.8% is culturally untenable for

europe. it is different for america jonathan: gdp forecast goes from 3.7% this year down to 2.8%. it is not looking great in .2. 23, 2 .1%. that is below their previous forecast of 2.8. tom: brent crude, 124 a barrel. it may go up or down, but that stasis on hydrocarbons right now is not friendly for christine lagarde. jonathan: is this rate guidance currency policy positive or negative? the knee-jerk response is currency policy positive. 10733. we have seen things turn around in a news company before, so things could change in 30 minutes time. based on the rate guidance, that seems to be the main focus of the bond market. yields higher in germany, much higher in italy.

tom: great weakness in hungary. i'm going back to euro swissie, 1.05. it is not a breakthrough, some form of swiss franc weakness, but i want to emphasize the dynamics here of this press conference are tangible. jonathan: a happy central banker is the president of the s&p. i'm sure he's been waiting for the ecb to make a move for a long time. tom: patrick armstrong is with us, chief investment officer at plurimi wealth management. can you invest in europe? patrick: you can invest in europe. this morning, i shorted italian bonds. i do own multinational equities, companies like asml. i own shell. you can invest in europe but you

want to think global context. i think europe is falling into recession, it has a tightening central bank for the first time in a long time, but i don't think the u.s. falls into recession. i think china will be in the mislead stimulus to be the second half of the year. if you invest in europe, i want to have growth in other areas. jonathan: i want to talk about the market before go to equities. do you think this is achievable, with reinvestments of pep, at the same time raising interest rates in the way that they are guiding us in the statement? patrick: i don't think so. it matters at the margin. it is designed to give the market some confidence in the periphery bonds, but i didn't realize i was betting on fragmentation when i shorted italy this morning. that is something that i'm deliberately pointing out, there is going to be consequences to the periphery as they end their

qe program on july 1. reinvestment is very small compared to the bond buying program that is inflation right now. lisa: shorting italian bonds, when do you see value again? when do you say it is a buying opportunity? patrick: if it blows outlined against germany, i am sure bunds. i just put italy on. if we see another 50 basis points wider against germany, i will probably start to close italy. i don't think it will be disaster but i think the market pushes for a response from the ecb where they put in something more meaningful to make sure the periphery you does not blow out wider. lisa: more flexible purchasing program, how much they will dive into the market. do you think they can be effective in suppressing yield in that region, moving against the inflation, as well as the

higher yields in the core? patrick: we will see at the press conference, it will be important. draghi was a master of it, using words and set of implicit policy. if lagarde is going to say that we will not let anyone ending up her faries which will have an impact on inflation, confidence, she stresses that we will do whatever it takes, if these kinds of things start to happen. in the statement that is out there right now, it says she is aware of it. the rhetoric and words may have just as much important as the policy in the coming weeks. jonathan: there have been so many doubts about whether the federal reserve can deliver on the rate hike inside. can you run me through how likely it is this ecb can deliver on gradual, sustained interest rate hikes? patrick: i was surprised by that because i didn't think they would want to commit themselves. the optionality she has been keen to create, she has almost

given up on some of that by saying this is the beginning of a gradual hiking cycle. i thought it would maybe be 50 in july and then see what happens, but she set the groundwork for 25 in july, maybe 15 september, which i think is very unlikely. that is meant to appease the hawks, i suppose. given the impacts of higher oil prices and energy prices on the european consumers and manufacturing, i think it will be very difficult to get a hiking cycle started in europe. if it does start, great news, something good has happened in the economy. jonathan: you also think 2.8% for this year is optimistic? patrick: i think europe is falling into recession. i think germany is committed to moving away from russian oil and natural gas by the end of the year. that is very stagflationary. that is a huge hit to manufacturing, jobs, higher prices. jonathan: back to that old

equity play. buy companies in europe that have international exposure. is that the play? patrick: that is the play for me, has been for quite a long time. europe is facing issues with growth and prices. for the first time not having negative interest rates which may be positive for the banks, but i would prefer to on the bank bonds rather than the equities. jonathan: thank you as always, patrick armstrong. going into an ecb news conference 21 minutes away. lisa: james stanley put this out. the ecb taking the most dovish route when trying to sound hawkish. we will hike in a month and then we will see. we are hearing people look at this message saying it is trying to sound hawkish but has a dovish tilt to it. jonathan: what is the time on that note? lisa: 8:03. jonathan: do you think she read it?

i have some doubts about whether people read the full. lisa: he was quoting the full statement. i think he is not wrong, some will agree with that. nick bennenbroek agreed to say the same thing which is why you see a lack of conviction around trading. they are basically trying to appease every constituents, so where is christine lagarde,? jonathan: trying to please everyone, everyone often ends up unhappy. people unhappy when it comes to european central bank policy. i'm with patrick, surprise they open the door to gradual stuff down the line. that is a rate hike cycle, not a wait and see. tom: i will go to what we saw at the fed press conferences. you alluded to this important press conference in 20 minutes. it could surprise. she could cut this the other way after the statements. jonathan: a news conference just

around the corner. julian emmanuelle of evercore. he has a 4300 price target on the s&p. hayes bear case is 2900 on the s&p 500. he joins us next on bloomberg surveillance. ritika: keeping you up to date with news from around the world, let's get to first word news. i'm ritika gupta. the european central bank will end asset purchases july 1 and begin raising interest rates for the first time in 11 years. the ecb boosted its inflation forecast this year from 5.1% to 6.8%, lowers its growth restriction this year and next. the house has packets -- passed a package of gun legislation to raise the aid for made to purchase semiautomatic rifles 18 to 21. that will be set aside from whatever happens in the senate.

house democrats are taking their investigation into the january 6 riots to prime time. tonight televised hearing will include testimony from a police officer injured that day and a documentary filmmaker who capture the event. jack ma's ant group says it has no plan to revive the ipo that was scuppered almost two years ago. it was reported that regulators have established a team to look at them. target rate its quarterly dividend by 20%. a full percentage point above walmart yield. this comes after target lower their profit outlook for the second time in a month. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg.

>> we are prepared for potential economic slow down toward the end of this year and next year. that is why central banks raise interest rates. i think they will be successful in containing inflation. i don't think it will be a severe recession. jonathan: no hurricanes over at standard chartered. that was the ceo. equity future up a 10th of a percent. big lived in italian bond market.

yields higher by 15 basis points. we will run you through the easy ecb stop and allow. julian emanuel at evercore. the bear case is 2900. that is a lot of downside. tom: i want to do some internal housekeeping on evercore isi. julian emmanuelle, how does and hyman's study of the american corporate economy affect this new view that you have? julian: what it does in reinforces the idea that our base case continues to be that there will not be a recession. we have had waves of concern, economic hurricanes may be offshore. ed's granular data says we are not at the point where there is like you to be a recession, yield curve or no yield curve.

what it does, when you look at the macro environment around you, it increases the probability of a recession in 2023. jonathan: why the change yesterday evening? julian: when you look at the move off of the level on may 20 and you think about how these kinds of bottoms form -- and to be clear, our view is you are in the midst of forming a non-recessionary bear market bottom. that is the face of you. what we have not seen is that fundamental catalyst. we all know the biggest fundamental catalyst is falling energy prices. we look for it everyday and it's not happening. the other thing is volume. when you get bottoms of that nature you see surges in volume, real concerned buying interest. that is lacking. jonathan: the bear case, 2900, is that the recession read?

where does that number come from? julian: if you look at recession bear markets over the last 100 years, the average is down around 41%. that gets you to 2900. we are not going there unless we get a recession. lisa: you talk about oil being the distinguishing feature. what is the pain point in oil that you are looking for? julian: i think it is pretty fair to say that when you think about the consumer psychology -- and you heard the president address it late last night on tv. the psychological pain point has already arrived, whether it is five dollars a gallon or whatever you want to define it as. when you look at historical data, for longer prices stay elevated at this level, the closer you get to the actual pain point. tom: i couldn't believe what the president said last night on

late night tv. lisa: he was very real trying to address the american people. julian, you talk about how sustained this is. what has to happen in order to get to 4800 at a time where people want to hear the bearish case, want to understand how much downside they have? julian: we need to see visibility into the idea that this so-called softish landing will crystallize. our fear here, there is only so much the fed can do to take energy prices down. they cannot do much at all. we have seen more hawkish rhetoric out of global central banks in the past week. we are likely to see that the next wednesday. the fear is it does not move inflation materially lower. if you get that breaking

inflation and consumer spending to hold in, that is where we get the upside. jonathan: that is the september pause. do you need that to get to the 4800 case? julian: not necessarily. the concept of volatility around the macro, and economic volatility whether driven by inventories or number of different issues, it is such a long time between now and september, the picture is likely to look almost entirely different. we don't know exactly what monetary policy will require but we do know that inflation will need to turn down meaningfully without a turndown in growth. jonathan: you have three numbers here, 4300, 4800, 2900. i will have a wager with you, the only when you're asked about today is the 2900. thank you for jumping on the phone for us.

2900 bear case, bouquets, 48. tom: it is not a bear case, it is a bramo case. lisa: people want to hear downside risk because people feel like things are heading in a negative direction, they want to know what could potentially transpire. if oil prices stay now where they are for a prolonged period, we could get there. that is what we're hearing from julian emanuel. we hear from almost every oil analyst with the exception of ed morse, that oil prices will not stay at this level. what is the downside and when does the consumer become vulnerable? jonathan: what is not standing still, the italian bond market. yields on 15 basis points on the italian 10 year. 12 on the 2-year note. a line about addressing

fragmentation. we will need more details to temper any concerns about what could happen here. then you have this kind is not just for july or september, but opening the door for something bigger perhaps. also a sustained move further down the road. that is an ecb talking about a rate hiking cycle, not a couple of hikes. lisa: italian bond traders are not hearing the flexibility from the ecb to possibly buy other bonds from other countries. not enough conviction to get a ceiling to these yields. jonathan: candy ecb president lean into the uncertainty, the risks around that sustained tightening cycle down the road? tom: i am looking at a fancy mathematical chart of the italian 10 year. from the beginning of the year, you have enjoyed a price move on that piece from 100 to 80. you lost 20% of value. i would suggest she has to lead with that. i should also note, it is a very

elegant chart, how your yield, lower italian bond prices. jonathan: interesting that the forecasts were in this. typically we have to wait until the news conference for that. i imagine they put that in there to justify the rest of it, the guidance around rates. it will be an interesting one potentially. the ecb news conference coming up with president lagarde. tom: she made the rameau case. jonathan: futures unchanged on the s&p. nasdaq 100 we are just about negative. we were enjoying a small morning of gains but not rolling over a little bit. from new york, this is bloomberg.

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jonathan: in a couple of seconds time we will have a news conference with ecb president christine lagarde. before that, jobless claims seconds away. futures unchanged on the s&p 500 and nasdaq. yields on treasuries tracking higher in germany, italy.

four basis points, 3.0641%. claims data into at any moment. we will wait for the number before he crossed over to the ecb president. the move in treasuries tracking what we are seeing in germany and italy. tom: a couple more beeps and you get through the autumnal 2018 higher yields. i will go to the idea of a regime change, the idea of the regime change being something christine lagarde has to address. there are the jobless numbers. jonathan: 200 29,000 against an estimate of 206. previous number of 200 k-ish. the wrong kind of upside surprise in jobless claims. lisa: it takes me back to what

rick rieder said on the show, this may be the last saw the job apart we have seen, the one on friday. how much our company going to start paring work forces that they built up for a different economy during the pandemic. are we starting to see that or is this just a normalizing market going back to something that we saw pre-pandemic? tom: claims are getting back to a january level, coming down from the pandemic. jonathan: movement in amsterdam, photos being taken. we can cross over and catch up with christine lagarde as she gives her view or the path ahead on the ecb look to hike interest rates. ♪ photos still being taken. typically i'm usually on time.

a bit of elevator music. >> today and also yesterday, we had the honor of hosting the ecb governing council here in amsterdam. it was the first time in 20 years that a governing council came to the netherlands again. today is also the first time that the ecb hosts this press conference again in physical form. i hope it will add to the joy. thank you. over to you. >> thank you. we are also joined on stage by president lagarde, by the vice president. this is a hybrid meeting. for those joining us remotely, i would like to ask you to turn on your cameras and microphones if

you ask a question. i will now give the floor to president lagarde. pres. lagarde: thank you very much. it is a real pleasure being here in amsterdam. we will come to that later. let me first wish you all in the room a good afternoon, as well. the vice president and myself welcome you to our press conference. i would like to thank the president for his kind hospitality and express our gratitude to his staff for the excellent organization of today's meeting of the governing council. hi inflation is a major challenge for all of us. the governing council will make sure that inflation returns to our 2% target over the medium-term. in may, inflation again rose significantly, mainly because of surging energy and food prices,

including due to the impact of the war. but inflation pressures have broadened and intensified with prices for many goods and services increasing strongly. euro system staff have revised their baseline inflation projections up significantly. these projections indicate inflation will remain undesirably elevated for some time. however, moderating energy costs, the easing of supply disruptions related to the pandemic, and the normalization of monetary policy are expected to lead to a decline in inflation. the new staff protections will see annual inflation at 6.8% in 2022, before it is projected to decline to 3.5% in 2023. 2.1% in 2024, higher than in

the march projections. this means that headline inflation at the end of the projection horizon is predicted to be slightly above our target. inflation excluding energy and food is projected to have reached 3.3% in 2022, 2.8% in 2023, 2.3% in 2024, also above the march projections. russia's unjustified aggression toward ukraine continues to weigh on the economy in europe and beyond. it is disrupting trade, leading to shortages of materials, and is contribute into high energy and commodity prices. these factors will continue to weigh on confidence and dampen growth, especially in the near-term.

however, the conditions are in place for the economy to continue to grow on account of the ongoing reopening of the economy, a strong labor market, fiscal support, and savings built up during the pandemic. once current headwinds abate, economic activity is expected to pick up again. this outlook is broadly reflected in the euro staff projections which foresees annual real gdp growth at 2.8% in 2022, 2.1% in 2023, 2.1% in 2024. compared with the march projections, the outlook has been revised down significantly for 2022, 2023, while for 2024, it has been revised up.

on the basis of our updated assessment, we decided to take further steps in normalizing our monetary policy. throughout this process, the governing council will maintain optionality, data dependence, gradualism, and flexibility in the conduct of monetary policy. first, we have decided to end net asset purchases, our asset purchase program as of july 1, 2022. the governing council intends to continue reinvesting in fuel, principal payments from purchases under the app for an extended period of time passed the date from when it starts rising the key ecb interest rate, and in any case, for as long as necessary to maintain ample liquidity conditions and

an appropriate monetary policy stance. second, we undertook a careful review of the conditions, which according to our forward guidance should be satisfied before we start raising the key ecb interest rates. as a result of this assessment, the governing council concluded that those conditions have been satisfied. accordingly, and in line with our policy sequencing, we intend to raise the key ecb interest rate by 25 basis points at our july monetary policy meeting. looking further ahead, we expect to raise the key ecb interest rates again in september. the calibration of this great increase will depend on the updated medium-term inflation outlook. if the medium-term inflation outlook persists or

deteriorates, a larger increment will be appropriate at our september meeting. third, beyond september, based on our current assessment, we anticipate a gradual but sustained part of further increases in interest rates will be appropriate. in line with our commitment to our 2% medium-term target, the pace at which we adjust our monetary policy will depend on the incoming data and how we assess inflation to develop in the medium-term. within the governing council's mandate, under stressed conditions, flexibility will remain an element of monetary policy whenever threats to monetary policy transmission jeopardize the attainment of price stability. the decisions taken today are set out in full in a press

release, available on our website. i will now outline in more detail how we see the economy and inflation developing, and we love that explain our assessment of financial and monetary conditions. looking at the economic activity, in the near-term, we expect activity to be dampened by high energy costs, deterioration in the terms of trade, greater uncertainty, and the adverse impact of high inflation on disposable income. the more in ukraine and renewed pandemic restrictions in china have made supply bottlenecks were second. as a result, firms face higher cost and disruptions in their supply chains, and their outlook for future output has deteriorated. however, there are also factors

supporting economic activity, and these are expected to strengthen over the months to come. the reopening of those factors most affected by the pandemic and a strong labor market with more people in jobs will continue to support incomes and consumption. in addition, savings accumulated during the pandemic are a buffer. fiscal policy is helping to cushion the impact of the war. targeted and temporary budgetary measures protect those people bearing the brunt of higher energy prices while limiting the risk of adding to inflationary pressures. the swift implementation of the investment and structural reform plans under the next generation eu program, the fit for 55 package and every power eu plan, would also help the euro area

economy to grow faster in a sustainable manner, and become more resilient to global shocks. looking at inflation now, inflation rose further to 8.1% in may. although governments have intervened and have helped slow energy inflation. energy prices stand 39.2% above their levels one year ago. market-based indicators suggest that global energy prices will stay high in the near-term but more than moderate to some extent. food prices rose 7.5% in may, in part reflecting the importance of ukraine and russia among the main global producers of agricultural goods. prices have also gone up strongly because of renewed supply bottlenecks, because of

recovering domestic demand, especially in the services sector as our economy reopens. price rises are becoming more widespread across sectors. accordingly, measures of underlying inflation have been rising further. the labor market continues to improve with unemployment remaining at its historical low of 6.8% in april. job vacancies across many sectors show that there is robust demand for labor. wage growth, including in forward-looking indicators have started to pick up. over time, the strengthening of the economy and some other effects should support faster growth in wages. while most measures of longer-term inflation expectations derive from

financial markets and expert surveys stand at around 2%, initial signs of above target revisions in those measures weren't close monitoring. let's turn to the risk assessment . risks relating to the pandemic have declined, but the war continues to be a significant downside risk to growth. in particular, a major risk could be a further disruption in the energy supply to the euro area, as reflected in the downside scenario included in the staff projections. furthermore, if the war were to escalate, economic sentiment could worsen, supply-side constraints could increase, and energy and food cost could remain persistently higher than expected. the risks surrounding inflation are primarily on the upside.

the risks to the medium-term inflation outlook include a durable worsening of the production capacity of our economy, persistently high energy and food prices, inflation expectations rising above our target, and higher than anticipated wage rises. however, if demand were to weaken over the medium-term, it would lower pressures on prices. let's have a look now at the financial and monetary conditions. market interest rates have increased in response to the changing outlook for inflation and monetary policy, with benchmark interest rates rising, bank funding costs have increased, and this has fed into higher bank lending rates. in particular for households. nevertheless, lending to firms

picked up in march, and this was because of the continued need to finance investment and working capital against the backdrop of increasing production cost. persistent supply bottlenecks and lower reliance on market funding. lending to households also increased, reflecting continued robust demand for mortgages, in line with our monetary policy strategy. the governing council has undertaking it by annual assessment of the interrelation between monetary policy and financial stability. the environment for financial stability has worsened since our last review in december 21, especially over the short term. in particular, lower growth and increasing cost pressures, as well as rising risk-free rates and sovereign bond yields could lead to further deterioration in the financing conditions faced by borrowers.

at the same time, tighter financial conditions could reduce some existing financial stability vulnerabilities over the near-term. banks, which started the year with solid capital positions and improving asset quality, are now facing greater credit risk. we will watch these factors closely. in any case, macro policy remains the first line of defense in preserving financial stability and addressing the medium-term vulnerabilities. summing up, russia's unjustified aggression toward ukraine is affecting the euro economy and the outlook is still surrounded by high uncertainty. but the conditions are in place for the economy to continue to grow and to recover further over the medium-term. inflation is undesirably high

and is expected to remain above our target for some time. we will make sure that inflation returned to our 2% target over the medium-term. accordingly, we decided to take further steps in normalizing our monetary policy. the calibration of our policy will remain data dependent and reflect our evolving assessment of the outlook. we stand ready to adjust all of our instruments within our mandates, incorporating flexibility if warranted, to ensure that inflation stabilizes at our 2% target over the medium-term. we are now ready to take your questions. thank you. >> the first question goes to caroline of bloomberg news. >> good afternoon, president lagarde.

one argument that you have made rather frequently over the last few months is that the euro area economy is in a very different place than other advanced economies. even so, three months after the fed started raising interest rates, you are now looking to do the same. is this still about a difference are we talking about more of a delay at this point? second of all, could you tell us about whether this week's discussion focused at all on fragmentation risks, whether there were any new proposals made to address them? thank you. pres. lagarde: thank you very much. the governing council, on the occasion of this meeting organized outside of frankfurt in beautiful amsterdam, thanks to the national central bank of the netherlands, focused primarily on the challenge of high inflation facing the euro

area, and on taking further steps in our normalization path that we started, i remind you, in december. so, it is not a question of catching up. it is a question of using all the tools that we have in order to deliver on our mandate of price stability and in order to bring inflation down to target over the medium-term. our analysis was that inflation was, as we said, undesirably high, that we had to take the steps that i have identified in the monetary policy statement. i would like to add that it is not just a step, it is a journey.

we started back in december. gradually, over the course of time, we put ourselves in a position to move away from unconventional monetary policy, which will actually be taking place as of the first of july, in order to use more conventional tools, which are the interest rates. on the issue of the interest rates, we also identified a path which is not only limited to a particular move but a series of moves over the course of the next few months, depending on the medium-term outlook of inflation. on the second issue, we have to have the right monetary policy stance. that is critically important, that is what we are doing with that identification of the journey that i just mentioned.

but we also have to make sure that our monetary policy is transmitted through the entire euro area. and to that end, we need to make sure there is no fragmentation that would prevent the adequate monetary policy transmission throughout the entire region. we have existing instruments. i think we have described them in the past. it is the reinvestment capacity that we have under the pep. i remind you, a complete reinvestment package that totals 1.7 trillion euros. that will be reinvested with total flexibility, if warranted, across time, across jurisdictions, across products. if it is necessary, as we have

amply demonstrated in the past, we will deploy existing instruments, or new instruments that could be made available. but we are committed -- committed to proper transmission of our monetary policy, and as a result, fragmentation will indeed be avoided to the extent that it would imperil that transition. >> the next question goes to mark. over here. >> thank you, president lagarde. my first question is whether today's decision was unanimous. could you give us a flavor of the discussion? secondly, the ecb is communicating that in september it could raise rates by more than a quarter percentage point.

did you consider already giving that message for the july meeting? thank you. pres. lagarde: thank you your question. as i said, we had very productive discussions in amsterdam. these discussions it concluded with a unanimously approved decision. as i said, we are on a journey, but this is clearly an important step in that journey, given that we are actually deciding to end that asset purchases under the app effective the first of july, which means effectively that we stop before for market operations. but we are also setting a path in which july, and that september, are the next first steps along the way hiking

interest rates. while we intend to raise interest rates by 25 basis points in july on the basis of the assessment we conducted today, we also indicate -- and i will read carefully for you because it was obviously a sentence that we drafted carefully in order to capture our commitment. we also indicated -- i will redo the whole paragraph, actually, because is an important one. we undertook careful review of the conditions, which according to our forward guidance -- you remember those three conditions -- should be satisfied before we start raising the key interest rate. we concluded those three things were satisfied. accordingly, in line with our policy sequencing, for those of you that did not wonder why we didn't do it today, we have a

sequencing in place, and we want to be predictable on that front, that we stop that asset purchases and that we look at interest rate hikes. in accordance with our policy sequencing, we plan to raise the key interest rates by 25 basis points at our july monetary meeting. then that is the september you are asking me about. looking further ahead, we expect to raise the key ecb interest rate again in september. the calibration of this rate increase will depend on the updated medium-term inflation outlook. if the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at our september meeting. that is pretty precise as a commitment, but it is also a factor of how the situation evolves. if the medium-term outlook persists as we see it right now, or even deteriorates, which of

course we don't wish but could happen, beasley, the increment will be higher than 25. then we go further. we take a third step along that journey to indicate what we will do beyond september which is also the anticipation that further rate hikes will be necessary on the basis of the data that we collected. thank you. >> the next question goes to bart myers of reuters. >> thank you. just to make it perfectly clear, from your last answer, does that mean that if the inflation outlook is not cut back down to 2%, that we will see a 50 basis point increase in september?

secondly, on the fragmentation -- i'm sorry, i lost the question. pres. lagarde: take your time, you will find it. >> you said you want to increase the rates by september. does that mean all three rates? thank you. pres. lagarde: good question. i do not want to give a reading exercise because some of you occasionally comment on the fact that i read too much. but this one i want to read a bit. every word matters, including plural versus singular, to your point. today, we expect to raise the key ecb interest rates, three of them, again in september. most likely. the calibration of this rate

increase will depend on the updated medium-term inflation outlook. here is the important one. if the medium-term inflation outlook persists or deteriorates , a larger increment will be appropriate at our september meeting. i think that you took the example of, if you are at 2.1% in 2024 or beyond, then the increment adjustment will be higher. the answer is yes. > next question goes to cnbc. >> thank you for clicking my question. what are you expecting in terms of time? if you raise rates in july, when do you see an effect