ECB Signals Interest Rates Strike the Right Balance Amid Controlled Inflation

European Central Bank President Christine Lagarde has reinforced the central bank’s confidence in its current monetary stance, asserting that prevailing interest rates are hitting the right level. In recent remarks, Lagarde emphasized that the ECB maintains comprehensive policy readiness to address evolving economic conditions.

The policy chief highlighted a critical shift in the inflation narrative. With price pressures now stabilizing, the ECB has moved from a defensive posture into a more strategic position. “The interest rates we established in our recent decisions represent the appropriate calibration,” Lagarde stated, underscoring that the central bank’s previous rate adjustments were well-considered.

However, Lagarde warned against complacency. While the risk landscape surrounding inflation has become more contained, external vulnerabilities persist. She identified two primary threats that could disrupt the current trajectory: potential additional tariffs from the United States and renewed supply chain disruptions. Both factors could reignite inflationary pressures and force a reassessment of the interest rate framework.

The ECB’s messaging reflects a delicate balance—maintaining confidence in its current interest rates while remaining vigilant about downside risks. As global economic conditions remain fluid, the central bank’s policy stance serves as a critical anchor for financial markets and economic expectations.