President Lagarde presents the latest monetary policy decisions – 6 March 2025
Mar 4, 2025
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Christine Lagarde, President of the European Central Bank and a key figure in global monetary policy, discusses crucial updates on the ECB's recent decisions. She highlights the strategy to curb inflation and achieve the 2% target. The conversation dives into the current economic performance and the anticipated developments in prices. Lagarde also addresses the risks facing the economic outlook and shares insights into maintaining stability in the euro area amidst high inflation and challenging lending conditions.
The ECB's decision to lower interest rates aims to stabilize inflation around 2% despite ongoing economic challenges and uncertainties.
Risks such as geopolitical tensions and global trade uncertainties could hinder euro area growth, even as rising incomes may support consumption recovery.
Deep dives
Interest Rate Decisions and Inflation Projections
The Governing Council has decided to lower the three key ECB interest rates by 25 basis points, particularly focusing on the deposit facility rate which guides monetary policy. This decision stems from a reassessment of the inflation outlook, which reflects a stable disinflation process. Projections suggest that headline inflation will average 2.3% in 2025, driven by stronger energy price dynamics, while the core inflation rate is expected to hover around 2% over the medium term. The ongoing adjustments in wages and prices, particularly in certain sectors, indicate that inflation will likely stabilize at the target level, supported by moderating wage growth.
Economic Growth Challenges and Labor Market Dynamics
The euro area economy showed modest growth in late 2024, but various challenges are influencing future projections, including subdued demand for labor and investment uncertainties. The forecast for economic growth has been downgraded, with figures of 0.9% for the upcoming years attributed to lower exports and investment volatility. Despite these hurdles, rising household incomes and a robust labor market could support consumption recovery over time. Inflation remains a concern, but as borrowing costs decrease due to interest rate cuts, a gradual pickup in demand is anticipated.
Risks to Growth and Monetary Policy Implications
Multiple risks continue to threaten economic stability, particularly geopolitical tensions and uncertainty surrounding global trade policies, which could dampen growth in the euro area. Concerns include potential escalations in trade conflicts leading to inflationary pressures and reduced demand for exports. Conversely, if easier financing conditions emerge alongside lower inflation rates, domestic consumption might rebound more robustly. Moreover, the ECB remains committed to a flexible approach in monetary policy, adapting to changing economic indicators to ensure that inflation stabilizes sustainably around the targeted levels.
Today our Governing Council decided on monetary policy, determining what’s needed to return inflation to our 2% goal in a timely manner.
Listen to President Christine Lagarde present today’s decisions. The statement also covers:
• how the economy is performing
• how we expect prices to develop
• the risks to the economic outlook
• the dynamics behind financial and monetary conditions
Our monetary policy statement at a glance, 6 March 2025 https://www.ecb.europa.eu/press/press_conference/visual-mps/2025/html/mopo_statement_explained_march.en.html
Christine Lagarde, Luis de Guindos: Monetary policy statement, 6 March 2025 https://www.ecb.europa.eu/press/press_conference/monetary-policy-statement/2025/html/ecb.is250306~4307bd0941.en.html
Monetary policy decisions, 6 March 2025 https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.mp250306~d4340800b3.en.html
Combined monetary policy decisions and statement, 6 March 2025 https://www.ecb.europa.eu/press/press_conference/monetary-policy-statement/shared/pdf/ecb.ds250306~ca4269dcc8.en.pdf
Macroeconomic projections, 6 March 2025 https://www.ecb.europa.eu/press/projections/html/ecb.projections202503_ecbstaff~106050a4fa.en.html
European Central Bank
https://www.ecb.europa.eu/home/html/index.en.html
You can also listen on all major podcast platforms.
Published and recorded during our press conference on 6 March 2025.
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