Lagarde's statement after ECB policy meeting
TLT•The ECB kept its three key interest rates unchanged. President Christine Lagarde said rising energy prices pose upside risks to inflation and downside risks to growth; euro area inflation rose to 3.8% in September from 3.2% in August.
1. Rates held steady
The European Central Bank’s Governing Council kept its three key interest rates unchanged and said it would take a data-dependent, meeting-by-meeting approach to future decisions, without pre-committing to a rate path. Lagarde said the bank remains committed to stabilising inflation at its 2% target over the medium term.
2. Energy lifts inflation risks
Euro area inflation rose to 3.8% in September from 3.2% in August, while energy price inflation increased to 18.9% from 14.3%. The ECB said energy prices had risen beyond the path projected in September, likely lifting inflation further in the near term; it also warned that a prolonged energy shock could affect other prices and wages.
3. Growth and financing conditions
The ECB said incoming data suggested the euro area economy continued to expand in the third quarter, supported by services, AI-related investment and government spending. However, it said renewed energy price increases had hit consumer confidence and tighter financing conditions were likely to weigh on growth. The bank cited downside risks to growth and upside risks to inflation.
