Live Updates > Live Update Details
2025-12-18 22:06:04
[Lagarde Explains ECB's Stance: Holding Rates Steady is Justified, Future Path Depends on Data] ⑴ Following the policy meeting, ECB President Christine Lagarde stated that the Governing Council decided to maintain the three key interest rates unchanged, and the updated assessment confirms that inflation should stabilize at the 2% target over the medium term. ⑵ She pointed out that new forecasts from Eurosystem staff show a slight upward revision to inflation expectations for 2026, mainly due to the anticipated slower decline in service inflation; while economic growth expectations have been revised upward across the board compared to September, primarily driven by domestic demand. ⑶ Lagarde emphasized that the ECB is determined to ensure inflation stabilizes at the target over the medium term and will follow a data-driven, meeting-by-meeting approach to determine the appropriate monetary policy stance, without pre-committing to a specific interest rate path. ⑷ Regarding the economic outlook, she stated that the economy has shown resilience, mainly driven by domestic demand, but challenges in the global trade environment and geopolitical uncertainties remain dragging factors. ⑸ On inflation, she noted that underlying inflation indicators have not changed significantly recently, wage growth is expected to slow in the coming quarters and stabilize at slightly below 3% by the end of 2026, with inflation expected to return to the target in 2028. (6) Lagarde detailed the upside and downside risks to inflation, including multiple factors such as trade policy, exchange rates, geopolitical conflicts, supply chains, wage pressures, and fiscal spending. (7) She assessed that financial and monetary conditions were generally stable, market interest rates had risen since the last meeting, and bank lending rates to businesses had remained broadly stable since the summer. (8) Lagarde concluded that the Governing Council was prepared to adjust all its instruments within its mandate to ensure that inflation remained sustainably stable at the medium-term target and to maintain smooth transmission of monetary policy. (9) Overall, the statement painted a picture of upward revisions to growth, a slight adjustment to the inflation path, but a solid medium-term target, providing a comprehensive justification for the ECB to pause interest rate cuts and enter a period of observation.
