Brussels: European Central Bank President Christine Lagarde expressed confidence that the eurozone is nearing its long-term inflation target, citing recent economic data and revised projections. Her remarks were published on Saturday following an interview with China’s Xinhua news agency earlier in the week.
Inflation Target in Sight
Lagarde affirmed the ECB’s outlook, stating that the central bank’s efforts are bringing inflation closer to the desired level of price stability.
“We are within reach of the 2% medium-term inflation target that we have defined as price stability,” she said, as quoted on the ECB’s official website.
This follows the ECB’s move earlier this month to revise down its inflation forecasts for both 2024 and 2025. The central bank now expects eurozone inflation to average 2.0% in 2025 and 1.6% in the coming year, signaling a stronger grip on price dynamics across the bloc.
Financial Stability and Digital Euro
Lagarde emphasized the crucial link between financial stability and achieving price stability.
“Financial stability was a prerequisite for price stability,” she noted during the interview, underscoring the ECB’s dual mandate of maintaining both monetary and financial order across the 20-nation eurozone.
She also touched on the progress of the ECB’s digital euro initiative, which has been under development for several years. Lagarde said the central bank is nearing the stage where the digital currency proposal could proceed—provided there is political backing.
“The ECB’s efforts to create a digital currency were getting to the point where, if lawmakers support the proposal, it should be ready to move forward,” Lagarde said.
Policy Path Ahead
With inflation easing closer to its target and interest rates potentially stabilizing after a series of hikes, the ECB is positioning itself for a cautious yet optimistic policy trajectory. Lagarde’s comments are seen as a sign that the central bank may be nearing a pause or even a gradual shift in monetary tightening, depending on how inflation behaves over the coming quarters.
