Christine Lagarde, ECB President, highlights the shift from unconventional to basic monetary policy tools, emphasizing data-driven decisions and resilience in Europe amid global shocks.
Christine Lagarde, President of the European Central Bank (ECB), delivered an introductory speech at the ECB Forum on Central Banking 2026 in Sintra, Portugal, titled “Back to basics in an uncertain environment”.
She reviewed the ECB’s response to past crises over the last 15 years, including asset purchases, refinancing operations, and innovative instruments to address fragmentation. She noted that monetary policy has shifted from unconventional tools to a focus on stabilizing inflation using policy rates as the primary instrument.
Lagarde emphasized that this return to basics does not mean a return to past conditions, but rather applying fundamental principles in new ways due to current global challenges. Factors enabling this shift include increased resilience of the European economy, strengthened institutional frameworks, and reduced fragmentation risks.
She discussed the impact of supply-side shocks, geopolitical tensions, and the importance of data-driven decision-making, including real-time indicators and scenario analysis, to navigate uncertainty. The ECB’s approach involves robust decision frameworks, including scenario testing, to ensure policy resilience across different possible outcomes.
Lagarde concluded that while the environment has changed, the core principles of monetary policy remain the same. The ECB continues to adapt its strategies to maintain price stability amid evolving global risks.
