Christine Lagarde, President of the European Central Bank, highlighted that global economic activity remains subdued but resilient despite trade policy uncertainties. Frontloaded demand ahead of tariffs provided temporary boosts, but longer-term growth is expected to soften. She stressed the importance of an open, predictable international economic order to support trade, investment, and shared prosperity.
Monetary policy in the euro area remains data-driven, with key interest rates unchanged in September 2025, supporting the ECB’s symmetric 2% medium-term inflation target. Euro area growth is projected at 1.2% in 2025, 1.0% in 2026, and 1.3% in 2027, supported by consumer spending, investment, and government infrastructure and defence outlays. Inflation is expected to moderate gradually, with headline inflation projected at 2.1% in 2025 and core inflation at 2.4%, though risks remain due to global trade volatility and energy prices.
Financial stability is underpinned by well-capitalised banks, resilient non-bank financial institutions, and regulatory frameworks that balance efficiency with oversight. Lagarde emphasised the need for robust macroprudential measures, careful management of stablecoins and digital currencies, and continued progress on the digital euro to strengthen Europe’s strategic autonomy and monetary sovereignty.
She also underlined the critical role of international cooperation through institutions such as the IMF, especially in addressing climate-related financial risks, supporting sustainable growth, and maintaining a rules-based, multilateral economic order. Europe remains committed to open markets, strong regulations, and central bank independence as foundations for stability in an interconnected and increasingly volatile global economy.
