ECB’s Lagarde: We Are ‘In a Good Place to Hold and to Watch How Risks Develop’
24 July 2025
By Marta Vilar – FRANKFURT (Econostream) - European Central Bank President Christine Lagarde on Thursday said that the ECB was well positioned to maintain a wait-and-see attitude pending the evolution of the situation over the upcoming months.
During the press conference following the Governing Council’s meeting, in which the ECB decided to keep its three key interest rates unchanged, Lagarde said that the central bank was ‘in a good place now to hold and to watch how these risks develop over the course of the next few months.’
The ECB will have a new projection in September and December, she added, but would reassess the outlook at each monetary policy meeting.
‘We are well positioned to deal with turbulent waters and to deal with the risks that will develop over the course of the next few months’ she said. ‘And I'm here referring particularly, but not only to the risk related to tariffs; but you can include geopolitical risks as well.’
Lagarde said that communicating more clearly about the potential rate path ahead was ‘not possible under the current circumstances.’
The decision to keep rates unchanged had been unanimous and the risk assessment was broadly backed by Governing Council members, she said.
‘Now, as to future path, I think it's all also widely shared by members of the Governing Council that we have to work on the basis of the data as they come in’, she added.
Economic growth was performing in line with the ECB’s expectations, ‘if not a little better’, according to Lagarde, who nevertheless repeated that risks to growth were tilted to the downside.
Were trade tensions to be resolved, uncertainty weighing on investment and consumption decisions would decrease and that would help the ECB anticipate and model the effects of such tariffs, she said.
Regarding retaliation, she said that a scenario with such measures was ‘optional’, and that it did not ‘seem to be a definite element.’
‘But the ultimate net of result in terms of inflationary forces or disinflationary forces cannot be determined at this point in time’, she added.
Asked about undershooting, Lagarde said the latest reading of inflation was at 2%, but some undershooting was forecasted for 2026.
‘But, as has been mentioned by some of my colleagues in their various speeches, we are not going to be moved away by some minor deviation, and we are looking at the medium-term targets’, she said.
However, ‘you will always find two or three governors who are very concerned about undershooting’, she said.
Inflation expectations were strongly anchored in the short term but also in the medium term, according to Lagarde.
The June projections' baseline scenario still held today and had been confirmed by recent data, she said.
‘And for the moment, we are relying on our baseline, relying on the scenario that we have done back in June, which we have published, which you all have had a chance to look at, and that's what is it is’, she said.
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