European Central Bank (ECB) President Christine Lagarde spoke this week with a calm confidence about inflation. She said there is still work to do, but the path toward the targeted 2% remains in sight. The core idea she emphasized is that the fight against rising prices is not finished, yet the trend toward price stability is expected to resume in time.
In a wide-ranging interview with Greek media outlet Antenna TV, Lagarde summarized her stance on keeping price stability as a central mission for the ECB. She underscored the bank’s commitment to medium-term control of inflation, describing it as an essential duty and a guiding objective for monetary policy. The message was clear: the fight for stable prices should stay at the heart of the ECB’s strategy, even as other economic factors unfold.
Lagarde stressed the need to monitor prices, wages, and corporate profits to identify where risks may accumulate. She expressed cautious optimism that inflation will gradually return to the 2% target, while noting that the process will require vigilance as conditions evolve. The president signaled that policy decisions should be made with this careful watching of the economic indicators in mind, rather than reacting to short-term noise. This approach aims to anchor expectations and support sustainable growth across the euro area.
Looking ahead to the upcoming policy meeting, Lagarde highlighted the importance of staying attentive to the extent and timing of potential interest rate adjustments. She urged policymakers to consider both domestic dynamics and international developments that could influence financial stability. Among the external risks discussed were tensions in the Middle East and their possible impact on energy markets, which could feed through to consumer costs and business sentiment. The region remains a politically sensitive corridor for energy supply, and observers note that any disruption tender to reverberate through prices and confidence across economies.
During the interview, Lagarde also addressed how geopolitical instability can affect monetary policy, pointing out that events in the Middle East can influence energy prices directly or indirectly. She noted that energy costs have a long reach, affecting production costs, household budgets, and overall demand. The ECB’s assessment includes these potential channels, recognizing that energy price shifts can complicate the path to price stability by shaping inflation expectations and real economic activity. This view aligns with the ECB’s broader framework, which links energy dynamics to inflation and growth within the broader European economy.
Lagarde reminded listeners that energy price spikes were a central driver of inflation in previous years, largely tied to global energy markets. She explained that the trigger in that period was linked to geopolitical events affecting energy supply, underscoring how external shocks can translate into domestic price pressures. The focus remains on resilient policy tools and transparent communication to guide markets through such shocks, while continuing to pursue the 2% objective through gradual and well-judged policy steps. The overarching message is one of steady progress toward price stability, coupled with readiness to adjust if risks to the outlook intensify. By maintaining this balance, the ECB aims to support both price stability and a stable environment for households and businesses across Europe, even as uncertainty persists in global markets.