Europe | ECB in wait-and-see mode

Summary

The ECB kept rates unchanged and appeared comfortable with the current level. Lagarde noted that the euro’s appreciation and the recent dip in inflation were no surprise, shifting the focus toward economic resilience and longer-term issues.

Key points

• Key points:
• The ECB kept rates at 2%, with Lagarde reinforcing the message that policy remains in “a good place” as inflation converges to target over the medium term.
• The euro’s appreciation was acknowledged but largely played down, with its impact seen as already reflected in the outlook.
• Lagarde leaned into the euro’s longer-term role, highlighting ongoing work on liquidity tools, including repo lines.
• The macro tone was mildly upbeat, stressing growth resilience, treating the inflation undershoot as temporary and largely overlooking tighter credit conditions.

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