ContextStatement by the ECB President to the IMF's steering committee at the Annual Meetings; the ECB keeps euro-area prices stable, and its main challenge is an energy-driven inflation surge.
Why it mattersIt gives the euro area's official view of inflation, energy and financial stability to the IMF's steering committee, during a period of high headline inflation.
- The Middle East conflict and trade tensions keep energy markets volatile and weigh on confidence.
- Headline inflation rose to 3.8% in September on energy, with upside risks if the shock persists.
- Non-bank financial firms with concentrated artificial intelligence exposures could amplify market stress.
- Set rates by assessing the inflation outlook, underlying inflation and the strength of transmission.
- Respond to the energy shock in a measured way rather than looking through it.
- Advance the savings and investments union and support multilateral action on global imbalances.
Read the speech summary
1. Growth and fiscal stance
Christine Lagarde tells the IMF's steering committee that the global economy proved resilient, helped by AI-related investment, though the Middle East conflict and trade tensions keep risks tilted toward weaker growth and higher inflation. Euro-area staff expect 0.9% growth in 2026, then 1.4% and 1.5%. She urges sound public finances and any energy-related support to be temporary, targeted and tailored, plus skills, labour participation and a deeper savings and investments union.
2. Inflation and rates
Headline inflation reached 3.8% in September on energy, with core at 2.5% and wages unmoved so far. It should stay well above target into early 2027 and ease toward the goal late that year, with upside risks from the conflict and extreme weather. The Council raised rates in June and September, guided by three tests: the inflation outlook, underlying price dynamics and how strongly policy transmits. Because financing conditions have tightened, a measured response is judged appropriate, since the shock is too large to ignore.
3. Financial stability and payments
Banks hold strong buffers, yet geopolitical tension, fiscal strain, AI concentration, dependence on a few service providers and private credit stress are worrying, though direct exposure to private credit is limited. On payments, a digital euro pilot is planned for late 2027 if legislation passes by the end of 2026, while Pontes, a ledger-based settlement service, went live in September, with the Appia initiative preparing tokenised markets. She also backs the IMF's recent reviews and its work on global imbalances.