ECB President Christine Lagarde announced that after 15 years of crisis‑driven unconventional policy, the European Central Bank will return to conventional rate adjustments to stabilize inflation. Lagarde noted that interest rates have risen above the effective lower bound, supply‑side shocks have become more common, and institutional reforms—such as stronger banking supervision and fiscal frameworks—have reduced fragmentation risks. The ECB will use measured, data‑dependent rate changes and rely on robust scenario analysis rather than forward guidance. The speech highlighted the importance of anchoring inflation expectations and improving underlying inflation indicators, allowing the ECB to respond more flexibly to shocks while keeping financial conditions stable.
© European Central Bank, 2025.
Summary derived from the ECB website (https://www.ecb.europa.eu ).
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