ECB’s Lagarde Emphasizes Data-Driven Policy After Rate Cut, Warns on Trade Tensions and Eurozone Growth Risks

European Central Bank (ECB) President Christine Lagarde addressed the media following the ECB’s widely expected decision to cut key interest rates by 25 basis points, emphasizing a cautious, data-dependent approach in the months ahead. Lagarde’s remarks balanced optimism on declining inflation with warnings about economic headwinds facing the eurozone.

 

Key Highlights:

Monetary Policy Outlook:

Lagarde stressed that future rate decisions will be made meeting by meeting, based on the latest inflation and economic data. "We are not pre-committing to a particular rate path," she said, reinforcing the ECB’s flexible stance.

 

Inflation Progress:

The ECB president noted both headline and core inflation have continued to decline as expected in March, supporting today’s rate cut, but cautioned that the inflation outlook will be reassessed continuously as new data emerge.

 

Concern Over Trade Tensions:

Lagarde highlighted that rising global trade tensions are dampening confidence among households and firms, with the potential to tighten financial conditions and weigh further on euro area growth.

 

Eurozone Economic Risks:

The president admitted that while the euro area has built up some resilience, the outlook for growth has deteriorated. Increased uncertainty is likely to have an adverse effect on market confidence and investment.

 

Asset Purchase Programme Update:

Lagarde confirmed the ECB’s APP and PEPP portfolios are contracting as planned, with the central bank no longer reinvesting maturing securities, signaling a gradual normalization of the ECB’s balance sheet.

 

Outlook:

Lagarde’s post-decision message signals continued caution and vigilance from the ECB, with monetary policy set to remain adaptive amid a shifting global landscape.

 

Source: ECB press conference, April 17, 2025.