The European Union’s (EU) trade agreement with the United States (US), as well as the ceasefire measures in the Gaza Strip, Palestine, “helped to reduce potential negative impacts” on the European economy, noted Christine Lagarde, the president of the European Central Bank (ECB). Russia’s war against Ukraine “remains a source of great uncertainty”.
After the interest rate meeting, which took place this Wednesday and Thursday, in Florence, Italy, the top head of the monetary authority seemed much less concerned about the fate of inflation and growth.
“From a monetary policy point of view, we are in a good place. Is it a fixed place? No, but we will do what is necessary to secure a good place,” he added. He also said that countries’ governments and their respective economies can do better in terms of growth, calling for more investment and structural reforms in favor of productivity and European competitiveness.
At a press conference at the Old Palace in Florence, Lagarde said she had “no major complaints about growth at the moment”, a possible comment on data released this Thursday by Eurostat, which showed that the Euro Zone grew 0.2% between the second and third quarter, slightly better than most economists estimated.
The largest economy, Germany, stagnated again, but France, the euro’s second largest market, grew more than expected. It made up for it a little.
For Lagarde, the current situation “is positive, but still subject to changes” and the usual risks.
The president of the ECB concedes that “certain risks to economic growth have diminished”, but it is also necessary to take into account that there are other “potential risks that have not yet impacted the market, especially bottlenecks and interruptions in global supply chains”.
On the issue of inflation, the president of the ECB said that salaries are helping (because they are growing less and less) and that the strength of the euro is serving as a shield against higher prices abroad and increasing European purchasing power in terms of imports.
“A stronger euro could contribute to a sharper decline in inflation”, although the outlook for price changes is currently “more uncertain than usual”.
The panel of salary indicators monitored by the ECB “points to a slowdown in salary growth in 2025 and the first half of 2026”, said the person in charge.
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