European Central Bank (ECB) President Christine Lagarde told the European Parliament’s Economic and Monetary Affairs Committee on Monday that the eurozone has effectively reached its disinflation goals. In a confident address, Lagarde emphasized that inflation risks have become more balanced and that the region’s labor market continues to show resilience despite lingering economic headwinds. She also hinted at a broader ambition: positioning the Euro as a stronger global currency amid waning confidence in the US Dollar (USD) under the Trump administration.
Key takeaways from Lagarde’s remarks
- The disinflation process is complete, and inflation is now close to the ECB’s 2% target.
- The Euro area economy has shown resilience despite ongoing uncertainty.
- The balance of inflation risks has narrowed on both sides.
- Strong Euro performance and weak exports continue to weigh on growth.
- Headwinds to growth are expected to fade over the coming year.
- The labor market remains a major pillar of strength.
- Wage growth is projected to moderate further.
- Underlying inflation remains consistent with the ECB’s medium-term objectives.
- No currency’s global dominance is guaranteed, highlighting the Euro’s opportunity.
- Lagarde urged “bold reforms” to reinforce the Euro’s global role as an anchor of trust.
- The ECB does not target exchange rates but remains attentive to their impact on prices.
- Overall, Lagarde concluded that “the ECB is in a good place.”
Lagarde’s remarks signal growing confidence within the ECB that the worst of the inflation battle is behind them. Her comments also underline the central bank’s ambition to expand the Euro’s international influence at a time when global investors are increasingly questioning the long-term stability of the USD.
