Lagarde comments at ECB press conference

FRANKFURT, June 10 (Reuters) - The European Central Bank maintained an elevated flow of stimulus as expected on Thursday, fearing that any retreat now would accelerate an already worrisome rise in borrowing costs and choke off the fledgling recovery. read more

Following are highlights of ECB President Christine Lagarde's comments at a news conference after the policy meeting.

COUNCIL DEBATE

"All the key points in the introductory statement have been agreed and seen as acceptable by all members.

"We did debate, and that is the beauty of us being together, we did debate whether it was right to actually move to this slight downside risk that we had back in March to this more balanced assessment to this assessment of more balanced risks, there was general consensus around that."

EURO ZONE VS U.S.

"The US economic situation and the euro area economic situation are very different stories. The two economies are at different points in the recovery cycle."

SUPPORT FOR STATEMENT

"There was unanimous support for the introductory statement."

DIVERGING VIEWS

"There was debate on the pace of the purchase, on some of the analytical aspects of the use of our instruments.

"That is why I used the words 'broadly agreed' by the governing council.

"There was here and there a couple of diverging views and not unanimous consent across the board"

EXIT NOT DISCUSSED

"Any kind of transition, exit, whatever you call it, has not been discussed"

CORE INFLATION

"There is also the movement on core inflation, we are clearly seeing an improvement and that dates back to December. The core inflation outlook has been revised, gradually."

BOTTLENECKS

"We assume some of the bottlenecks that we know of, that some of those bottlenecks will gradually phase out."

ON DISCUSSING PEPP EXIT

"Any discussion about exit from the PEPP would be premature, too early and it will come in due course but certainly for the moment it is too early and premature, simple as that."

STRATEGIC REVIEW

"We are in the process of a strategic review...It has been suspended unfortunately because of COVID-19 ... I hope we will be able to give the outcome of the strategic review in the second half of 2021."

PEPP PURCHASES

"(We) expect net purchases over the quarter to continue to be conducted at a significantly higher pace than during the first months of 2021. We are going to do that in the next three months according to market conditions, which clearly include seasonality. We will do that with the very core attribute of PEPP, which is flexibility."

INFLATION IMPROVEMENT

"We are seeing some improvement of the inflation number and our assessment for 2021 is 1.9% which is clearly north of our last projection."

WEAK WAGES

"We don't see much by way of service prices going up... and that is because wages have not increased significantly. We see a little bit more movement possibly, and we hope that we will see more of it."

STEADY HAND

"The conclusion that we reached (on policy approach), I would say 'steady hand'"

TIGHTENING CONDITIONS

"We see a little bit of tightening (in monetary conditions) very, very moderate though, there is a potential that what we observed on the market interest rates actually could pass, or is at risk of passing to the financing conditions of the corporate sector."

DIFFERENTIAL INFLATION

"Inflation in some countries, Germany (for instance) will go north of the forecast for the whole of the euro area."

"We don't see much by way of service prices going up"

MORE OPTIMISTIC

"We spent a lot of time looking at the quarterly staff projections and went deep into each and every item. I could say that we were somewhat more optimistic about the economic outlook than we were three months ago.

The latest signal that we are getting is a strong rebound in the second quarter and hopefully (that) will be amplified in the third quarter."

SUPPLY BOTTLENECKS

"We also looked into supply side bottlenecks...that will create some headwinds, certainly"

FINANCING CONDITIONS

"On the financing front, we clearly see broadly stable financing conditions taken together the corporate and the household sector. There is a little bit of an increase in the corporate sector, clearly attributable to the Netherlands and Germany. Probably attributable to a tactical approach by banks in those particular countries.

"Overall, absent those particular factors, we see a little bit of tightening, very, very moderate though."

ThomsonReuters Global News Desk

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