Lagarde Sees Price Stability in the Eurozone Amid Global Uncertainties

After years of fluctuations, stability has finally returned to the eurozone, according to European Central Bank (ECB) President Christine Lagarde. Speaking on July 4, 2025, to German broadcaster ARD during her official visit to Berlin for talks with Chancellor Merz, Lagarde emphasized that while there are numerous crises and threats, “price stability remains firm.” The ECB is determined to preserve this hard-won stability. In June, eurozone inflation stood at 2.0%, aligning precisely with the ECB’s target. The central bank has already cut its key interest rate by two full percentage points since June 2024, most recently setting it at 2.0%. Investors expect a pause in rate cuts during the ECB’s upcoming meeting, though speculation continues over a potential reduction to 1.75% later this year. Lagarde declined to commit to a specific rate path: “We will decide based on our compass,” she stated, referring to the medium-term inflation goal of 2.0%. She reiterated that the ECB would use all available tools to achieve this objective. Lagarde also addressed U.S. tariff policies, calling them a major source of uncertainty and stressing the need to prepare for various scenarios. With U.S. President Donald Trump’s deadline of July 9 approaching, failure to reach an agreement could result in increased tariffs on European goods. Beyond trade tensions, Lagarde highlighted the importance of reducing internal barriers within the EU’s single market. While not overly regulated, the eurozone suffers from excessive bureaucracy and legal requirements. “We must reduce that a little,” she remarked. Lagarde urged greater efficiency and productivity across EU economies to strengthen the euro’s position as a global reserve currency, noting that monetary strength reflects economic power. Political leaders, she added, must ensure the right conditions for such economic growth.