ECB President Christine Lagarde expresses confidence that the bank’s policy path will guide inflation back to the 2 percent target. In an interview with La Tribune Dimanche, she outlined a clear conviction that the institution can steer price pressures toward the target while anchoring expectations and maintaining credibility in monetary normalisation.
Lagarde stressed that the objective is to reduce inflation to 2 percent, and the central bank is committed to achieving this goal. At the same time, she warned against letting inflation expectations become unmoored and triggering a lasting upward spiral. In September, the ECB raised its key rate to a record high of 4.5 percent, marking the tenth consecutive year of tightening. Most ECB Governing Council members believe keeping policy at this elevated level for a period will support a return to the target without precipitating an unnecessary downturn.
The ECB’s key interest rates are at levels that, if maintained for a sufficient stretch, should push inflation back toward the target with the aim of stabilising price growth as rapidly as possible. Lagarde highlighted that the policy stance, while restrictive, is designed to cool demand and reduce price pressures while preserving the economy’s resilience to shocks.
The regulator’s strict approach has weighed on the economy, with growth pacing being modest this year. Lagarde emphasized that the objective is not to trigger a recession, and there remains cautious optimism about near‑term growth prospects, even as Germany experiences some softening momentum. The central bank’s message is one of patience and careful calibration, prioritising durable price stability over short‑term gains.
Inflation remains persistent, albeit with a measurable deceleration, while economic activity shows signs of softening. The IMF’s latest projections were noted as having adjusted downward worldwide, excluding the United States, reflecting a mix of global demand and supply dynamics that influence the inflation path and growth outlook for 2024 and beyond.
By the end of September, the ECB had lifted rates to levels not seen since the early 2000s, underscoring the seriousness with which the council views inflation containment. Lagarde and the Governing Council are navigating a landscape of elevated uncertainty, aiming to restore price stability while avoiding an unnecessary legacy of higher unemployment or stagnation.
Even with the higher rates, the president reaffirmed that the central bank will maintain a vigilant stance and avoid swerving from the long‑term objective of price stability. Her remarks underscore the balance the ECB seeks: restrain inflation today to secure sustainable growth tomorrow, and guard against the risk of entrenchment that could complicate future policy normalization.