ECB President Christine Lagarde addressed the European Parliament’s Committee on Economic and Monetary Affairs, discussing inflation trends, economic growth, and the divergence between actual and perceived inflation.
Christine Lagarde, President of the European Central Bank (ECB), delivered a speech at the hearing of the Committee on Economic and Monetary Affairs of the European Parliament.
She highlighted that this week marks four years since Russia’s aggression against Ukraine, expressing solidarity with Ukraine.
Lagarde discussed the challenging environment faced by the euro area, noting inflation peaked at 10.6% in October 2022 and has since declined to 1.7% in January 2026. The ECB’s monetary policy has played a key role in bringing inflation back to the 2% target.
She noted that despite inflation decreasing, surveys show many citizens perceive prices to be rising faster than official data indicate, which can influence economic behavior and trust in institutions.
The euro area economy grew by 0.3% in Q4 2025 and is projected to grow by 1.5% in 2026. Domestic demand, especially in services, contributed to growth, while manufacturing remained resilient amid geopolitical and trade uncertainties.
Inflation in January was driven by energy and services prices, with core inflation at 2.2%. Real wages have recovered and are above early 2021 levels, with wage growth expected to moderate to around 3% in the medium term.
The ECB maintains its monetary policy stance, keeping key interest rates unchanged, and will continue to base decisions on incoming economic data and inflation outlooks, without pre-committing to specific interest rate paths.
Lagarde addressed the divergence between actual and perceived inflation, emphasizing that perceptions are influenced by personal experiences, media, economic uncertainty, and financial literacy. Perceived inflation has historically exceeded measured inflation by about 1.2 percentage points in the euro area.
She outlined measures to align perceived and actual inflation, including effective communication, enhancing financial literacy, and the ECB’s efforts to make policies more accessible through digital platforms and educational initiatives.
In conclusion, she stressed the importance of trust and cooperation between policymakers and the public to reinforce the legitimacy of the euro and ensure effective monetary policy.
She invited questions from the committee.
