European Central Bank President Christine Lagarde, speaking at the International Monetary and Financial Committee, restated the Governing Council’s monetary policy stance following its September decision to keep key ECB interest rates unchanged, with the deposit facility rate at 2.0%. She reiterated that decisions will remain data-dependent and taken meeting by meeting, with no pre-commitment to a particular rate path, to ensure inflation stabilises at the ECB’s 2% medium-term target. The statement described a euro area outlook shaped by trade-related headwinds and a stronger euro, after cumulative growth of 0.7% in the first half of the year. ECB staff projections referenced in the remarks foresee growth of 1.2% in 2025, 1.0% in 2026 and 1.3% in 2027. Headline inflation was cited at 2.2% in September (flash estimate), with core inflation at 2.3%, and the September projections put headline inflation at 2.1% in 2025, 1.7% in 2026 and 1.9% in 2027, while core inflation is expected to fall from 2.4% in 2025 to 1.9% in 2026 and 1.8% in 2027. Lagarde also referred to the ECB’s June monetary policy strategy assessment, which confirmed the symmetric 2% inflation target while updating the framework for a more volatile inflation environment. On financial stability and payments, Lagarde pointed to the 2025 EU-wide stress test as evidence that euro area banks are well positioned, while warning that efforts to simplify the international regulatory framework should not amount to deregulation. She flagged persistent liquidity vulnerabilities and pockets of leverage in the non-bank financial institution sector and endorsed strengthening the macroprudential framework in line with Financial Stability Board recommendations, alongside better data to close information gaps. The remarks also said the Eurosystem is progressing work on a digital euro and exploring new technologies for wholesale settlement in central bank money, while urging rapid establishment of the legislative framework for a digital euro and noting that stablecoin risks in the euro area appear contained but require consistent cross-border regulatory approaches, with global implementation of FSB stablecoin recommendations described as fragmented.
European Central Bank 2025-10-17
European Central Bank reiterates 2.0% deposit facility rate stance and calls for rapid digital euro legislation and consistent stablecoin rules
ECB President Christine Lagarde reaffirmed maintaining key interest rates, emphasizing a data-dependent approach to stabilize inflation at 2%. She noted euro area growth projections, inflation forecasts, trade challenges, and a stronger euro. Lagarde endorsed macroprudential framework enhancements, urged swift legislative action for a digital euro, and cautioned against deregulation in simplifying international regulatory frameworks.