Growth expectations exceed predictions - Lagarde

The head of the European Central Bank believes the institution has borrowing costs right where they need to be, even as different countries across the eurozone show varying economic pictures.

Christine Lagarde, who leads the ECB, told a Slovak television channel JOJ24 on Friday that officials made good choices at their latest gatherings.

“The interest rates we settled on at the last meetings are, in my view, set correctly,” she said during the broadcast. She added that the bank finds itself in a strong spot considering how inflation has been brought back down.

Lagarde did point out some worries on the horizon. Price pressures could start climbing again if the United States decides to raise tariffs or if problems pop up with supply chains around the world. Still, she noted that possible threats to stable prices have gotten smaller.

The comments show how satisfied ECB leaders feel about where things stand now. Inflation numbers are hanging around the 2% mark that the bank aims for, while the economy has held up better than many thought it would against American tariff policies. When officials gather in December, most don’t expect they’ll need to change rates.

New predictions coming out every three months might spark some conversation if they show inflation falling short of what the bank wants. Notes from the October meeting revealed that some officials worried about this happening, though they felt their current approach could handle unexpected problems.

Luis de Guindos, who serves as vice president of the ECB, said this week he only sees a “limited” chance that price growth ends up too weak.

He called the current rate level of 2% “the correct one.” Philip Lane, the chief economist, mentioned that wages aren’t growing as fast anymore, which should help slow down costs outside of energy that are still rising faster than preferred.

Growth expectations exceed predictions – Lagarde

When talking about the broader economy, Lagarde said the eurozone has shown more strength than anyone anticipated, despite big changes happening worldwide.

“The situation has exceeded our expectations,” she explained. Looking ahead, she said the bank expects growth of 0.9% at the start of 2025, jumping to 1.2% by September. She wouldn’t be shocked if the actual growth rate turns out even higher before the year ends.

Germany has been going through rough times, and France has been dealing with budget fights in its government. But Lagarde stayed upbeat about it all.

“I’m unequivocally optimistic — that’s just my nature,” she said. “In a world undergoing transformation, it’s necessary to act quickly, stay perceptive, but also remain optimistic. So, I always see the glass as half full rather than half empty.”

Mixed picture across member nations

New information released Friday backed up the idea that both growth and inflation in the eurozone are moving along a stable path. This supports what many economists think – that the ECB won’t be cutting rates anytime soon.

Growth has surprised people by holding strong despite uncertainty over trade policies, helped partly by a job market where companies are still hiring. Inflation has stayed close to 2% throughout the year, matching what forecasters said would happen months ago.

Different countries show wildly different results. Spain’s economy is booming while Germany can’t seem to shake off years of barely moving forward. But when you put all the numbers together, they point to steady inflation and continued growth, even if it’s not particularly exciting.

Inflation stayed flat at 0.8% in France, picked up speed to 2.6% in Germany, eased down slightly to 3.1% in Spain, and dropped to 1.1% from 1.3% in Italy.

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