About Christine Lagarde
Christine Lagarde, President of the European Central Bank, has been navigating the economic impact of the war in the Middle East and the resulting energy price shock. In April 2026, the ECB's Governing Council decided to keep interest rates unchanged, citing intensified upside risks to inflation and downside risks to growth. Lagarde stated the conflict has led to a sharp increase in energy prices, pushing up inflation and weighing on sentiment, and that the longer the war continues, the stronger the likely impact on broader inflation and the economy. She emphasized a data-dependent, meeting-by-meeting approach and ruled out pre-committing to any particular rate path.
In June 2026, the ECB raised its three key interest rates by 25 basis points. Lagarde described the decision as unanimous and not an "insurance" or "preemptive" move, but a response to the major energy shock enduring longer than expected and broadening through direct costs. She said the rate hike was robust across a range of scenarios and that the ECB remains committed to stabilizing inflation at its 2% target in the medium term. Among other topics, Lagarde advocated for the swift adoption of a digital euro, which she said would enhance Europe's strategic autonomy and financial integration, and called for deeper capital markets union, including a mutualized debt instrument to provide market depth and liquidity. She also spoke on gender equality, stating that closing gender gaps could boost GDP and that building confidence is important for women in leadership roles.
Source: AI-verified profile updated from Christine Lagarde's recent appearances.
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✨ AI-enhanced transcript with speaker attribution
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Christine Lagarde0:00
Inflation rose to 3.2% in May from 3% in April. Energy price inflation ticked up to 10.9% in April, while food price inflation fell from 2.4% to 2%. Inflation, excluding energy and food, picked up to 2.5% from 2.2% in April, as goods inflation edged up to 0.9% and services inflation increased from 3% to 3.5%.
Domestic cost pressures eased in the first quarter, supported by slower growth in wages and profits. The ECB's wage tracker and surveys on wage expectations continue to indicate that wage growth should ease over the year. However, it is becoming more expensive for firms to source other inputs and they therefore expect to put up those selling prices. Moreover, some indicators of underlying inflation have already been driven higher by the energy shock.
Inflation expectations over shorter horizons remain well above levels before the outbreak of the war in the Middle East. At the same time, most measures of longer-term inflation expectations stand at around 2%, supporting the stabilization of inflation around target in the medium term.
The increase in energy prices will lift inflation further over the summer and keep it well above target into the first half of 2027. It will also have an impact on food, goods, and services inflation. Inflation should then return to target in the second half of 2027, supported by falling energy prices and slower increases in other prices.
However, the war in the Middle East remains a major source of uncertainty, and the longer energy prices stay high, the more likely they are to drive up broader inflation through indirect and second-round effects. We will therefore closely monitor the size and persistence of the energy price increase and how it feeds through to price and wage setting, inflation expectations, and overall economic dynamics.
The risks now to the inflation outlook are to the upside. If energy prices were to rise by more and for longer than currently expected, euro area inflation would increase further. This could be reinforced and become more persistent if higher energy prices were to spill over by more than expected to other prices and to wages, if longer-term inflation expectations were to rise in response, or if global supply chains were disrupted more broadly.
