Lagarde: Inflation towards 2% but 'exceptional uncertainty'

"With inflation set to stabilise sustainably around our 2% target, the Governing Council decided earlier this month to cut key interest rates again by 25 basis points. At current interest rate levels, we believe we are in a good position to cope with an uncertain environment," she said. This was said by ECB President Christine Lagarde in her speech before the Committee on Economic and Monetary Affairs in the European Parliament.

"Particularly in the current context of exceptional uncertainty," Lagarde said, "we will adopt a data-driven approach and assess the most appropriate stance of monetary policy on a meeting-by-meeting basis. Our interest rate decisions will be based on the outlook for inflation, the dynamics of core inflation and the strength of the monetary policy transmission. We do not commit ourselves in advance to a particular rate path'.

"This year," he continued, "has been marked by profound economic and geopolitical uncertainty at the global level. As we navigate a world increasingly characterised by fragmentation, uncertainty and conflict, Europe must reaffirm its role as a pillar of economic and political stability. If we are to foster innovation and strengthen resilience, deeper European integration - particularly in financial markets and payment systems - is not simply a political aspiration, but a strategic necessity'.

"Accelerating progress towards a digital euro is a strategic priority," the ECB president went on to say. "In addition to addressing some of the risks posed by stablecoins, a digital euro would help safeguard Europe's bank-based financial and monetary system. It would not only strengthen Europe's strategic autonomy, but also ensure an innovative and resilient European retail payments system."

Lagarde again called on the European Parliament to schedule the debate on the introduction of the digital euro, which continues to be delayed. "My request is that this debate on the digital euro be put on the calendar as soon as possible because we will all be responsible if this project that responds to a historic development is not at least put on the table for discussion. We are doing our best to define the technical standards but if the issue is delayed then we will all be responsible but I hope this is not the case."