Eurozone economy proving resilient, says ECB’s Lagarde
“There will be more shocks, we know that, but we are in a good position,” she says from Jackson Hole
[BRUSSELS] The euro-area economy is holding up reasonably well and inflation is at the European Central Bank’s 2 per cent target, President Christine Lagarde said.
“Growth is relatively modest, but resilient and on its way up with the fundamentals such as consumption and investment looking good at the moment,” Lagarde told Fox Business’ Mornings with Maria in an interview broadcast on Monday (Aug 25). While the economy is “not thriving,” it’s “increasingly back to potential,” she said.
On inflation, Lagarde highlighted that the latest readings and the medium-term expectations are at 2 per cent. “There will be more shocks, we know that, but we are in a good position,” she said from Jackson Hole, Wyoming, where she attended the Federal Reserve’s annual symposium.
The ECB kept interest rates unchanged in July and looks increasingly likely to do so again next month, with Bundesbank President Joachim Nagel telling Bloomberg TV on Friday that there’s a “high bar” for further action following eight cuts to date.
That chimes with a wider feeling that the recent trade deal between the European Union and the US won’t knock the region’s economy far off the trajectory it’s currently on. Lagarde herself has argued that the pact could have been much worse for the EU.
Before the new tariffs took force, the 20-nation eurozone unexpectedly eked out growth in the second quarter, while August saw private-sector activity expand at the quickest pace in 15 months as manufacturers emerged from a three-year downturn.
Firmer growth momentum should help minimise the risk that inflation undershoots the ECB’s 2 per cent medium-term goal. Consumer-price gains are currently predicted to average 2 per cent in 2027 – the final year for which forecasts are available. Officials don’t expect major revisions when new quarterly projections are presented next month. BLOOMBERG
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