Christine Lagarde, President of the European Central Bank, presented a statement at the International Monetary and Financial Committee meeting on October 17, 2025, highlighting subdued but steady global economic activity amid trade headwinds. She noted the ECB's unchanged key interest rates and projections for moderate growth and inflation in the euro area. The outlook emphasizes resilience in services and labor markets, balanced against geopolitical and trade uncertainties.
In her address at the fifty-second meeting of the International Monetary and Financial Committee during the IMF Annual Meetings on October 17, 2025, Christine Lagarde outlined the ECB's perspective on global and euro area economic conditions. Since the last IMFC meeting in April, global economic activity has remained subdued but steady, despite ongoing trade policy headwinds. This resilience partly reflected frontloading of demand ahead of tariffs, though Lagarde cautioned that this boost is unlikely to persist, with growth dynamics expected to soften further.
A predictable and open international economic order is essential for sustaining global trade and investment, Lagarde stated. Recent preliminary trade agreements have reduced uncertainty, but elevated levels persist and may weigh on investment. The full impact of evolving policies will become clearer over time, amid reconfiguration of global trade flows.
On monetary policy, the ECB Governing Council kept key interest rates unchanged in September, with the deposit facility rate at 2.0%. 'We are determined to ensure that inflation stabilises at our 2% target in the medium term,' Lagarde affirmed. The ECB follows a data-dependent, meeting-by-meeting approach, based on inflation outlook, underlying dynamics, and transmission strength. Earlier in June, the ECB concluded its monetary policy strategy assessment, confirming the symmetric 2% target while updating the framework for volatile environments.
The euro area economy grew by 0.7% cumulatively in the first half of the year, with stronger first-quarter growth reversing in the second due to tariff anticipations. Higher tariffs, a stronger euro, and global competition are expected to restrain growth this year, though effects should fade next year. Surveys indicate robust services growth and resilient labor markets, supporting consumer spending. ECB staff projections forecast euro area growth of 1.2% in 2025, 1.0% in 2026, and 1.3% in 2027.
Headline inflation edged up to 2.2% in September from 2.0% in prior months, driven by energy prices, while core inflation held at 2.3%. Projections see headline inflation at 2.1% in 2025, 1.7% in 2026, and 1.9% in 2027. Nominal wage growth slowed to 3.9% in the second quarter, with further moderation expected alongside productivity gains to contain price pressures.
Lagarde stressed the need for strategic investments, sustainable finances, and reforms to enhance euro area resilience, including completing the banking and capital markets unions and advancing a digital euro. Risks to growth are more balanced post-trade deals, though geopolitical tensions and potential renewed trade frictions remain concerns.