European Central Bank (ECB) President Christine Lagarde expressed confidence in the resilience of the Euro Zone economy in a live interview with Fox. She noted that economic growth, while moderate rather than stellar, is steadily trending upward and gradually returning toward its full potential.
Lagarde highlighted that key indicators such as consumption and investment are in a healthy state. She emphasized that although the performance isn’t dazzling, the overall trajectory reflects steady improvement.
Regarding trade tensions, Lagarde remarked that U.S. tariffs have had only a modest impact on the Euro Zone’s GDP. She expressed confidence that businesses will adapt to these conditions effectively.
Reflecting on her remarks at the recent Jackson Hole symposium hosted by the Federal Reserve, Lagarde confirmed that both the latest inflation data and medium-term expectations remain aligned with the ECB’s 2% target. Acknowledging the likelihood of future shocks, she remarked, “Of course more shocks will come, we know that—but we are in a good position.”
On monetary policy, she noted that the ECB left interest rates unchanged in July and suggested that a similar pause is expected in the upcoming meeting.
Meanwhile, Joachim Nagel, President of the Bundesbank, warned in a separate Bloomberg TV interview that after eight consecutive rate cuts, any additional move would demand exceptionally strong justification.
Market sentiment remains cautiously optimistic. Recent developments—including a new EU–U.S. trade agreement—are not expected to derail the Euro Zone’s current economic trajectory. Lagarde had previously noted this agreement could have been far more adverse to the bloc.
Encouragingly, prior to the implementation of new tariffs, the 20-country Euro Zone posted unexpected growth in the second quarter. Additionally, private sector activity in August revealed that manufacturing emerged from a three-year slump, registering its fastest expansion in the past 15 months.
Source: Bloomberght/ Prepared by: İlayda Gök