Christine Lagarde, ECB President, discusses global economic turbulence, euro area outlook, inflation, monetary policy, financial stability, payments, and international cooperation at the IMF meeting.
Christine Lagarde, President of the European Central Bank (ECB), delivered a statement at the fifty-third meeting of the International Monetary and Financial Committee.
The global economy faces turbulence due to geopolitical tensions, trade frictions, and the war in the Middle East, which has led to rising energy prices and increased uncertainty. These factors pose risks to global growth and inflation.
For the euro area, economic activity grew by 1.4% in 2025, supported by rising incomes, low unemployment, and increased investment in digital technologies. The ECB’s projections estimate real GDP growth of 0.9% in 2026, with potential scenarios reflecting varying impacts of energy supply disruptions. Risks to growth are tilted to the downside, especially from geopolitical tensions and tighter global financial conditions.
Inflation rose to 2.6% in March 2026, driven by higher energy prices, with core inflation at 2.3%. The ECB’s projections anticipate inflation averaging 2.6% in 2026, with risks skewed to the upside due to potential persistent energy shocks. Wage growth is slowing, and inflation expectations remain anchored around the 2% target.
In March, the ECB Governing Council kept interest rates unchanged, emphasizing a data-dependent approach to monetary policy. The war in the Middle East introduces additional uncertainty, influencing near-term inflation and growth prospects. The ECB also announced enhancements to the Eurosystem repo facility (EUREP) to improve liquidity support amid global volatility.
Financial stability remains resilient but faces risks from energy disruptions, inflationary pressures, and market volatility. The banking system is supported by strong capital and liquidity, though rising credit risks among energy-intensive firms could pose challenges. Strengthening regulatory frameworks and international cooperation are key to safeguarding stability.
The Eurosystem’s new payments strategy aims to adapt to digital innovations, including the digital euro, and support the development of a European digital assets ecosystem through projects like Pontes and Appia. These initiatives promote a secure, scalable, and innovative payments environment.
International cooperation remains vital amid ongoing economic challenges. The ECB supports the IMF’s efforts to ensure macroeconomic stability, improve surveillance, and foster financial innovation, emphasizing the importance of multilateral institutions in addressing global risks.
