BNY’s Head of Markets Macro Strategy Bob Savage reports that Christine Lagarde told the European Parliament the Euro area outlook is highly uncertain, with growth supported by real incomes and investment but weighed by tariffs, a stronger Euro and geopolitics. Inflation is projected to stabilize at 2% over the medium term, and the ECB will stay data-dependent without pre-committing to a rate path.

Lagarde stresses data-dependent ECB stance

"ECB President Christine Lagarde has told the European Parliament that the euro area outlook remains subject to significant uncertainty, with activity expected to be supported by rising real incomes, a resilient labor market and increased investment in defense, infrastructure and digitalization, while higher tariffs, a stronger euro and geopolitical tensions weigh on trade."

"Inflation is projected to stabilize at the 2% target over the medium term, with wage growth expected to moderate to around 3%."

"The ECB will maintain a data-dependent, meeting-by-meeting approach and is not pre-committing to a rate path."

"Lagarde also stressed that the ECB is not targeting the euro, focusing instead on the need to anchor inflation expectations through clear communication and improved financial literacy to sustain public trust and policy effectiveness."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)