ECB’s Lagarde is speaking at the Hearing of the Committee on Economic and Monetary Affairs at the European Parliament and comments:
Euro Area Economic Outlook
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The euro area economy showed resilience, growing 0.7% in the first half of the year, supported by domestic demand.
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Growth was uneven: frontloading of trade boosted Q1, but higher tariffs, stronger euro, and global competition weighed on Q2 and are expected to limit growth short term.
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Services sector remains strong, offering underlying momentum.
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Labour market is holding up, supporting consumer spending despite softening demand.
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Past ECB rate cuts and government spending on infrastructure and defence expected to support investment.
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Growth forecasts: 1.2% (2025), 1.0% (2026), 1.3% (2027).
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Risks to growth have become more balanced, with downside risks from trade tensions and upside potential from reforms and spending.
Inflation Outlook
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Inflation close to 2% target (2.2% in September; core at 2.3%).
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Real wages recovered to pre-inflation surge levels; wage growth moderating (3.9% in Q2 vs. 4.8% last year).
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Projections: 2.1% (2025), 1.7% (2026), 1.9% (2027).
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Inflation ex-energy/food: 2.4% (2025) → 1.8% (2027).
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Risks remain from volatile global trade environment, but the range of risks has narrowed.
Monetary Policy Stance
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Disinflation process is over; inflation expected to remain around 2%.
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ECB kept interest rates unchanged at last meeting.
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Policy remains data-dependent and meeting-by-meeting.
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No pre-commitment to a rate path—decisions will be based on inflation outlook, underlying dynamics, and transmission strength
There is really not a lot of surprise in Lagarde’s prepared speech
