By David Barwick – FRANKFURT (Econostream) – Keeping inflation at 2% over time ensures that external shocks pass rather than become embedded in persistently higher inflation, European Central Bank President Christine Lagarde said Saturday.

“The shocks of the last few years affected people’s lives via price increases, above all for energy and food,” Lagarde said in a speech at the Fête de la Pomme, the annual political gathering hosted by Normandy regional president and Les Centristes leader Hervé Morin in Épreville-en-Lieuvin, France. “Keeping inflation at 2% over time is how we make sure that these shocks pass, rather than settle into lasting higher inflation.”

Lagarde offered no fresh guidance on the interest rate outlook and did not discuss Thursday’s decision to raise the deposit rate by 25bp to 2.50%.

Much of her speech focused on Europe’s vulnerability to external shocks and the need for closer integration of its energy, services and capital markets.

Euro-area companies had seen exports subject to U.S. tariffs fall by almost one-fifth since the beginning of 2025, Lagarde said. Meanwhile, internal barriers confronting companies selling services across European borders were estimated to be equivalent to tariffs of around 100%, she said.

Europe needed to become less vulnerable by connecting its energy grids more effectively and bringing its savings and capital markets together, Lagarde said.

ECB economists estimated that rapid business adoption of artificial intelligence could make the euro-area economy around €630 billion larger annually within a decade, equivalent to roughly €1,800 per euro-area resident, she said.

Lagarde also presented the digital euro as a means of reducing Europe’s reliance on foreign payment providers, noting that two non-European companies handled around two-thirds of card payments in the euro area.

“The digital euro can give you a European means of payment that’s yours, accepted everywhere in the euro area, online and offline, alongside cash,” she said.