• It’s not impossible to see the Fed and ECB take different paths in the short term
• We are absolutely focused on delivering on inflation target
• If shocks take inflation off target but not persistently, we should be measured in our response

How measured of a response is the question? Does that mean not moving rates at all or less than they would otherwise? Lagarde didn’t offer much today but I can see a scenario where the ECB walks back rate hikes or pushes back on the 39 bps that’s priced in through July.

Of course, much of that is going to depend on where oil prices go in the next two months. The interesting scenario to me is if oil settles around $80 vs $60 pre-war. That’s obviously going to push inflation above target but it’s not some kind of persistent shock and it won’t redline inflation at some intolerable level.

Now here’s the bad news: The ECB will screw it up. They always screw it up. Trichet was hiking into the oil shock in 2007 as the US economy was falling apart and that led to at least part of the malaise that led to the next decade of stagnation in Europe.