The European Central Bank (ECB) cannot commit in advance to future monetary policy or rate cuts due to pervasive risks and uncertainties in the Eurozone, ECB President Christine Lagarde stated on Thursday.
“Everywhere we turn, there are risks and uncertainties," Ms Lagarde told the press. Under these circumstances, while the bank remains determined to achieve its goals, it cannot pre-commit to a specific path, she added.
The ECB President also warned of the consequences for the Eurozone of escalating trade tensions and tariffs announced by Donald Trump. The US tariffs would reduce Eurozone growth by hindering exports and weakening the global economy, she warned.
Moreover, while a substantial increase in spending on defence and infrastructure could boost growth in the zone, it could also create price tensions, Ms. Lagarde noted.
Referring to the hundreds of billions of euros in investments announced this week by Germany and the EU, Ms. Lagarde stressed the need to understand how this would work, the timeline, and financing, so as to draw conclusions and assess the contribution to growth and the impact on inflation.
