President Christine Lagarde said that the European Central Bank can’t relent on inflation, with the US administration’s trade policy creating uncertainty.
“It is a daily struggle,” she told France Inter Radio on Monday. “We are almost where we should be, but we have to remain there, so that’s why I say it’s a constant battle.”
Policymakers have cut interest rates in six quarter-point moves since June, though there’s no clear consensus on what will happen at the April 17 decision. That’s partly because of US President Donald Trump’s planned April 2 announcement on reciprocal tariffs and their still unpredictable global fallout.
“We are all absolutely determined to arrive at this target, which is a target of 2%” on inflation, Lagarde said. “In terms of the path to get there, some want to gallop, to go very fast. Others say let’s do a small trot, let’s wait to see what the obstacles are along the way.”
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Lagarde spoke a day before March euro-area inflation data are due, with economists predicting only limited improvement, offering arguments for both sides of the debate on whether to cut interest rates again.
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“I am: analyze the data as we go along, let’s not anticipate, let’s not do forecasts on what’s going to happen next week, next month,” she said. “But let’s record all the data, and have a serious analysis of the perspective of price stability, which remains the compass.”
Turning to Trump’s trade policy, Lagarde reiterated that his measures will hurt the global economy, saying that “everyone loses in a trade war, including the US.”
“Unfortunately we are subject to a host of uncertainties, and when Mr. Trump decides suddenly to raise tariffs by 25% on the automobile sector or decides on reciprocity, which will apply from April 2, necessarily that leads to changes,” she said.
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Still, this is an opportunity for Europe, said Lagarde, who is a former French finance minister.
“Today, we are two days away from a deep change in geopolitics and geoeconomics, decided by the American president,” she said. “For our Europe and France of course, I see this as the start of a step toward independence.”
“We are at an existential moment for Europe in which if we are able to take this step to independence, in terms of defense — which is not my topic so I won’t speak of that — energy and finance, which is much more my subject — we must absolutely take the reins now,” she said.
