If this event had been held a few weeks ago, my speech would have been very differentBut we find ourselves yet again in a different worldWe are facing profound uncertainty about the path of the economyNone of us can resolve the uncertainty about how the war in Iran will play outOur response will be rooted in our monetary policy strategy, which is well equipped to help us navigate itTwo factors to focus on in dealing with inflationary energy shocksThe first is the intensity and duration of the shockThe second is the propagation of the shock, which depends on the macroeconomic environment in which it landsInitial shock has so far still been smaller than in 2021-22Two key elements on how we can calibrate policy under this uncertaintyThe first is agility, taking a meeting-by-meeting, data-dependent approachThe second element is a focus on risksWe needed to take into account not only the most likely path for inflation, but also the risks and uncertainty surrounding the baselineSupply shocks are often presented as offering central banks a binary choiceThat is to either look through, or react when inflation expectations are at risk of being de-anchoredWe will not act before we have sufficient information on the size and persistence of the shock and its propagationHowever, we will also not be paralysed by hesitationFull remarksDespite market expectations, the tone in her speech here doesn't sound like she is feeling too hurried to raise interest rates in April next month. That especially since she outlines the fact that there is value in waiting to assess the overall situation. And also adding that the scale of the initial energy price shock is less profound than what they saw it to be back in 2021-22 during the Russia-Ukraine conflict.This definitely keeps things interesting as we look to their policy decision next month.Traders are now pricing in ~59% odds of a rate hike with 63 bps of rate hikes priced for year-end after Lagarde's comments. This article was written by Justin Low at investinglive.com.