Christine Lagarde, ECB President, addressed the European Parliament’s Economic and Monetary Affairs Committee, highlighting AI’s potential, economic outlook, and implications for monetary policy and growth.
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 emphasized the importance of artificial intelligence (AI) for Europe’s economic future and its potential to enhance productivity, competitiveness, and living standards.
Lagarde discussed recent economic data, noting resilient growth in the euro area despite energy shocks, with solid GDP growth in the second quarter of 2026 and positive outlooks for the third quarter. She highlighted strong manufacturing, rebounding consumer confidence, and increased AI-related activity in digital services, investment, and exports.
The labour market remains robust, with unemployment at 6.4% in July, though employment growth is slowing. Inflation increased to 3.2% in August, driven by energy prices, while food inflation decreased slightly. The ECB’s projections estimate inflation at 3.0% in 2026, declining to 2.1% in 2028, with uncertainties remaining high.
The ECB raised key interest rates by 25 basis points earlier this month to maintain inflation at the 2% target. The decision was based on a comprehensive assessment of inflation outlook, underlying inflation dynamics, and monetary transmission, considering risks from energy prices and growth.
Regarding AI, Lagarde outlined its transformative potential and macroeconomic effects, particularly on productivity, investment, and labour markets. She noted that 38% of firms reported moderate AI use by late 2025, with only 7% using it significantly. Investment in AI infrastructure in Europe is rising but still lags behind the US.
Lagarde discussed AI’s impact on employment, noting that over 50% of workers already use AI in their jobs, and firms employing AI tend to hire more. The long-term effects on employment and income distribution remain uncertain, with the need for policies supporting innovation, independence, and widespread adoption of AI technologies.
She emphasized Europe’s need to reduce fragmentation, enhance critical AI capabilities, and promote deep AI deployment through retraining and supportive policies. The goal is to harness AI’s benefits while ensuring sovereignty and resilience.
In conclusion, Lagarde stressed the importance of monitoring AI’s effects on the economy and inflation, and creating conditions for AI to boost productivity and living standards. Uncertainty should not hinder action, as the future of AI requires proactive measures.
