On Thursday, June 5, 2025, following the European Central Bank’s (ECB) decision to cut key interest rates by 25 basis points, bringing the refinancing rate to 2.15%, ECB President Christine Lagarde held a press conference alongside Vice President Luis de Guindos. Lagarde stated that the rate cut aligns with recent economic developments, noting that inflation is currently near the target of 2%. Inflation is expected to reach 2% by 2027, and economic growth in Europe is projected to remain robust this year. Strong labor market conditions and real income growth are expected to boost household spending. However, trade tensions and geopolitical uncertainties could impact growth. Lagarde emphasized the ECB’s commitment to maintaining inflation at the target level sustainably and reiterated that monetary policy decisions will remain data-dependent. The eurozone economy grew by 0.3% in Q1 2025, with unemployment remaining low. Energy prices have declined significantly, easing inflationary pressures. Lagarde also highlighted the importance of advancing the regulatory framework for a digital euro. While wage growth is expected to remain below 3% in 2026 and 2027, inflation forecasts suggest it will stabilize near the target in the medium term. The ECB remains prepared to adjust all tools to achieve its inflation goals, and future rate decisions will depend on upcoming economic data.
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