ECB’s Lagarde: ‘We Are Getting to the End of the Monetary Policy Cycle’

5 June 2025

ECB’s Lagarde: ‘We Are Getting to the End of the Monetary Policy Cycle’
Christine Lagarde, president of the European Central Bank, at the ECB press conference in Frankfurt on June 5, 2025. Photo by the ECB under CC BY-NC-ND 2.0.

By Marta Vilar – FRANKFURT (Econostream) - European Central Bank President Christine Lagarde on Thursday made clear that the ECB was nearing the final stage of its easing cycle.

During the press conference following the Council’s meeting, at which the ECB decided to cut its three key interest rates by 25bp, Lagarde said, ‘I think we are getting to the end of the monetary policy cycle that was responding to compounded shocks, including the illegitimate war in Ukraine, and the energy crisis’.

The situation now was ‘different’ and there were ‘different players and policies’, he said.

‘[W]e will continue to analyse and assess and measure and make sure that we deliver on our 2% medium-term target’, she added.

After today’s cut, the ECB was in a ‘good position’ to tackle uncertainty, she said.

The decision was ‘almost unanimous’, according to Lagarde, who revealed that there was one Governing Council member who did not back today's decision.

‘Other than that, it was virtually unanimous; I would call it very broad consensus or virtually unanimous support for the decision to cut by 25bp’, she said.

The neutral rate was not a topic of discussion at the meeting, according to Lagarde, who said that ‘as we are getting closer to that zone, we need to be particularly attentive’.

There was ‘no point’ in having a debate around the direction of travel or going ‘sideways’ with respect to interest rates, she said.

‘For those in doubt, headline inflation in 2026 is clearly oil and gas, and the value of the euro’, she said with regards to the factors leading to the upside revision of HICP to 1.6% next year.

Expanding on this topic, Lagarde said that the revision was due to a ‘carry-over’ effect and that the ECB believed that the impact of tariffs on exports to the US ‘will impact predominantly on 2026.’

Asked about her potentially early departure from the ECB to the WEF, Lagarde said, ‘I can very firmly tell you that I have always been and I'm fully determined to deliver on my mission and I'm determined to complete my term.’

 

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