TL;DR
Get business pricing on office and shipping supplies
- Business-only prices and quantity discounts
- Tax-exempt purchasing
- Multiple users, one account, clear invoices
ECB President Christine Lagarde told the IMF’s International Monetary and Financial Committee on Oct. 17 that the euro area has remained resilient, but the Middle East conflict and energy prices pose risks to growth and inflation. She cited September rate increases and said future ECB decisions would depend on incoming data, underlying inflation and monetary policy transmission.
European Central Bank President Christine Lagarde told the IMF’s International Monetary and Financial Committee on Oct. 17 that the euro area economy had held up despite global uncertainty, while an energy shock linked to conflict in the Middle East was raising inflation and clouding the outlook. She said the ECB had raised its key interest rates by 25 basis points in September, following an increase of the same size in June, and would set future policy using incoming data.
The ECB’s September staff projections put euro area growth at 0.9% in 2026, 1.4% in 2027 and 1.5% in 2028. Lagarde said growth was broad-based across most countries and sectors in the first half of 2026. The projections anticipate support from recovering real incomes, a resilient labour market, public investment in infrastructure and defence, and spending on artificial intelligence and digital technology.
Inflation had moved higher: headline inflation reached 3.8% in September, which Lagarde attributed mostly to an energy-price surge and, to a lesser extent, higher food and services inflation. Core inflation was 2.5%. She said underlying inflation measures were broadly stable and wages had not yet shown a material response to the energy shock. The ECB expects energy prices to keep headline inflation well above its target into the first half of 2027, with a return to around target expected toward the end of that year.
Lagarde said the Governing Council considered the inflation outlook and its risks, underlying inflation dynamics, and the strength of monetary policy transmission when setting rates. The ECB sees no significant pass-through of energy prices into other prices and wages beyond what its projections already include, she said. At the same time, tighter financing conditions and higher long-term interest rates are expected to weigh on growth.
Energy Costs Complicate ECB Policy
The statement sets out the policy challenge facing the euro area: higher energy prices are expected to lift inflation, even as tighter financial conditions may slow economic activity. If energy costs spread more strongly into wages and other prices, inflation could prove more persistent than projected. If financing conditions constrain demand more than expected, growth could weaken further.
Lagarde said the energy shock was too large for policymakers to ignore, while describing a measured response as appropriate. That signals that the ECB is weighing the inflation threat against the effects of higher rates on the economy. The statement does not announce a new rate decision beyond the June and September increases; it explains the criteria the Governing Council says will guide future decisions.
The growth projections also matter for governments and businesses planning investment. Lagarde said public infrastructure and defence spending, AI investment and stronger foreign demand could support activity. But the outlook depends partly on how long the Middle East conflict and associated energy disruption continue.
energy price surge protection devices
As an affiliate, we earn on qualifying purchases.
As an affiliate, we earn on qualifying purchases.
September Forecasts and Rate Moves
The statement was delivered at the 54th meeting of the International Monetary and Financial Committee during the IMF Annual Meetings. It presents the ECB president’s assessment to the committee, including the central bank’s September projections and recent policy decisions.
In June and September 2026, the ECB Governing Council raised key interest rates by 25 basis points each time, according to Lagarde’s statement. She said the September projections already accounted for some energy-related effects. The ECB’s outlook is that headline inflation will decline after the first quarter of 2027 as energy inflation falls, returning to around target toward the end of the year.
Lagarde also said the Eurosystem had decided in July on the operational features and onboarding process for an enhanced EUREP repo facility for central banks. More than 30 central banks had expressed interest in the facility in the preceding six months, she said. The statement describes EUREP as supporting monetary policy transmission and the euro’s international role.
““The energy shock is too large to ‘look through’ but a measured response remains appropriate to keep inflation in check.””
— Christine Lagarde, ECB president, speaking to the IMFC
Conflict Leaves Forecasts Exposed
The duration and intensity of the Middle East conflict, and how energy-market shocks will spread through the economy, remain uncertain. Lagarde said a more intense or persistent shock could increase indirect and second-round inflation effects. The ECB also identified extreme weather as a possible source of higher food prices.
The statement does not specify the size or timing of any future rate moves. It says the Governing Council will assess incoming data and notes that financing conditions have tightened, but does not quantify how much that change will affect growth or inflation. The statement’s final section begins a discussion of financial stability vulnerabilities but provides no further detail in the supplied source material.
ECB Decisions Will Follow Data
The ECB Governing Council’s next policy decisions will depend on its assessment of incoming economic and financial data, underlying inflation and the effectiveness of monetary policy transmission, Lagarde said. The statement does not give a date or outcome for a future rate decision.
For the outlook, key developments to watch include energy prices, whether inflation spreads beyond energy into wages and other prices, and the effects of tighter financing conditions on growth. The ECB’s September projections provide its current forecast path, but Lagarde said uncertainty around the conflict and its economic effects remains substantial.
Key Questions
What did Christine Lagarde tell the IMFC?
She said the euro area economy had been resilient but faced downside risks to growth and upside risks to inflation, particularly from the Middle East conflict and energy prices. She also described how the ECB assesses interest-rate policy.
What are the ECB’s euro area growth projections?
The ECB’s September staff projections forecast growth of 0.9% in 2026, 1.4% in 2027 and 1.5% in 2028. These are projections, not confirmed outcomes.
Why did inflation rise in September?
Lagarde said headline inflation rose to 3.8%, mostly because of a surge in energy inflation and, to a lesser extent, increases in food and services inflation. Core inflation was 2.5%.
Did Lagarde announce a new interest-rate change?
No new rate decision was announced in the statement. Lagarde reported that the ECB raised key rates by 25 basis points in June and by 25 basis points in September, and said future decisions would be based on incoming data and the ECB’s policy criteria.
What is EUREP?
EUREP is the Eurosystem repo facility for central banks. Lagarde said the ECB had decided on the enhanced facility’s operational features and onboarding process in July, and that more than 30 central banks had expressed interest during the preceding six months.
Source: primary
Halloween Picks
halloween
As an affiliate, we earn on qualifying purchases.
