At a hearing of the European Parliament’s Committee on Economic and Monetary Affairs, European Central Bank President Christine Lagarde reviewed the euro area outlook and reaffirmed the ECB’s current monetary policy stance, including the Governing Council’s October decision to keep the key ECB interest rates unchanged and to remain data-dependent on a meeting-by-meeting basis. Lagarde reported euro area growth of 0.2% in the third quarter, supported by domestic demand and services, while manufacturing and exports were weighed down by higher tariffs, elevated uncertainty and a stronger euro. Inflation was described as close to the 2% medium-term target, with Eurostat’s flash estimate showing headline inflation at 2.2% in November and core inflation at 2.4%; wage growth was noted as moderating from 5.7% in the second quarter of 2023 to 3.9% in the second quarter of this year. She also outlined key instruments intended to safeguard monetary policy transmission, describing Outright Monetary Transactions as conditional on an appropriate European Stability Mechanism programme, the Transmission Protection Instrument as aimed at countering unwarranted disorderly market dynamics subject to a set of eligibility criteria, and the pandemic emergency purchase programme as a flexible tool used during the COVID-19 shock, with reinvestments of maturing PEPP bonds fully discontinued from December 2024. The next Eurosystem staff projections are due to be published on 18 December, and Lagarde noted that the Governing Council will consider new instruments if needed to pursue price stability. She also welcomed the European Commission’s forthcoming package on capital market integration and supervision.
European Central Bank 2025-12-03
European Central Bank reiterates unchanged interest rates and sets out OMT, TPI and PEPP tools at European Parliament hearing
ECB President Christine Lagarde reaffirmed the monetary policy stance at a European Parliament hearing, highlighting the decision to keep key interest rates unchanged. She reported euro area growth of 0.2% in Q3, with inflation near the 2% target, and outlined instruments like Outright Monetary Transactions and the Transmission Protection Instrument. Lagarde also welcomed the European Commission's upcoming package on capital market integration and supervision.