The Governing Council decided to keep the three key ECB interest rates unchanged. We are determined to ensure inflation stabilizes at our 2% target in the medium term. We will follow a data-dependent, meeting-by-meeting approach. We are not pre-committing to a particular rate path.
Given recent events including new tariff threats by the U.S., have inflation and economic risks become more pronounced? Has the ECB's 'good place' become less comfortable? How did you discuss the euro's exchange rate appreciation against the dollar?
Journalist (Bloomberg)
Christine Lagarde
Risks are broadly balanced. Some risks have ticked up, others down. On the exchange rate: we do not target an exchange rate, but we monitor it closely. The dollar has depreciated measurably against the euro since March, but fluctuates in a range recently. The impact of past appreciation is incorporated in our baseline.
On the global role of the euro, don't you have to account for a stronger euro? Are you looking at repurposing swap lines to enlarge the euro liquidity pool?
Journalist
Christine Lagarde
A strong international currency does not necessarily imply it is 'strong' relative to others. It requires a reliable environment, a strong global position, and trading capacity. We are looking at our liquidity framework and repo lines to make them more attractive to central banks outside the euro area.
Can you give flavor of the risk discussion? Are we still in a 'good place'?
Journalist (Reuters)
Christine Lagarde
We no longer state risk balance in statements; we list upside/downside components. There is debate, but sentiment is broadly balanced. We are in a good place; inflation is moving gradually down to target. We cannot be hostage to one data point (like January's 1.7%).
Under what conditions of inflation undershooting would the ECB consider easing?
Journalist
Christine Lagarde
We have projected undershooting in 2026 for a long time. Our medium-term target is 2% in 2027/2028. We are attentive to services inflation and wages. Nothing is really changing the baseline.
Is the statement's mood music hawkish? Core inflation has fallen to lowest since 2021—is that good or bad?
Journalist (Financial Times)
Christine Lagarde
I'm not characterizing hawkish/dovish. We are data-dependent, not rate-path predetermined. Core inflation at 2.2% is following a path we anticipated, taking us to target.
Labor market indicators seem mixed. Is it weaker than unemployment suggests? What AI investment benefits are you seeing in Europe?
Journalist (Wall Street Journal)
Christine Lagarde
Labor market is still active; unemployment is low. We see increased participation. On AI: Investment is the big story, both public and private, particularly in ICT/AI infrastructure like data centers. It will impact productivity and inflation over time.