ECB President Lagarde (Q&A): the ECB is once again giving "framework guidance" (when asked about market pricing and if she still feels the market understands the reaction function). Adds, the situation is primarily a supply shock.

The ECB has historically treated supply-driven inflation differently from demand-driven, since tighter policy cannot produce energy or goods and the case for looking through the shock runs through second-round effects and wage-setting rather than the headline print. Framing the episode as primarily supply-side therefore tends to argue against front-loaded tightening even when the inflation overshoot is large, and in past episodes of this kind the market's first instinct to price hikes has repeatedly met verbal pushback of exactly this sort. The reference to framework guidance is an attempt to re-anchor pricing in the reaction function rather than in any single data point, a pattern seen whenever officials judge that market-implied paths have run ahead of the Governing Council's centre of gravity. The operative distinction is between the hawks around her and the statement she fronts: as President she is constrained to the consensus, so the signal is the refusal to validate the path, not an alternative path. Follow-ons worth noting are how other Council members position relative to this framing, and whether wage and expectations data start to be cited as the trigger that would convert looking-through into action.