ECB’s Lagarde: Still in a “Good Place”, Risks to Growth “More Balanced”

11 September 2025

By Marta Vilar – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde said on Thursday that the ECB was still in a good place and that risks to economic growth were “more balanced” than in the June projections.

Speaking at the press conference following the ECB Governing Council meeting, Lagarde said: “We continue to be in a good place… because inflation is where we want it to be.”

She noted that risks to economic activity had evened out, citing greater clarity on potential trade retaliation and reduced trade-related uncertainty.

“Higher tariffs, a stronger euro and increased global competition are expected to hold growth back for the rest of the year, the effect of these on growth should fade next year”, she said.

Survey indicators showed continued expansion in both manufacturing and services, pointing to “some positive underlying momentum in the economy,” Lagarde said.

The inflation outlook, however, was “more uncertain that usual” and the disinflationary process was “over”, she said referring to recent price shocks.

Addressing projections of inflation dipping below target in 2027, averaging 1.9%, Lagarde dismissed the concern, attributing it to the lagged effect of exchange rate movements.

“[I]t's really on account of the exchange rate impact, with the lag effect that it usually has, and this is factored into our projections”, she said. “That explains to you the one point, the fat 1.9.”

Lagarde also cited the ECB’s recent strategy review and pointed that minimal deviations of target would not automatically warrant policy action.

On market expectations that the easing cycle was effectively over, Lagarde said she did not “have to be happy or unhappy” about such pricing.

“[W]e monitor markets always”, she said. “[A]s part of our projections, we account for market positioning at a certain point in time. So, in a way, we also factor into our assumptions a particular situation.”