At the October meeting of the ECB Governing Council, Lagarde made a statement to the press in Frankfurt after keeping the three main policy rates constant in line with market expectations.
Lagarde, who started her speech by announcing monetary policy decisions, signaled a new interest rate increase in December by pointing out the risks posed by the accelerating increase in energy prices and rising financing costs since September.
Lagarde stated that this two-way combination of risks clearly complicates the road map ahead of the bank.
"Interest rate hike is on the table"
Evaluating the monetary policy stance for the next period, Lagarde made the following statements:
"Incoming data indicate that the Eurozone economy continues to grow in the third quarter of the year. Risks to the growth outlook remain downward. At the same time, new increases in energy prices have hit consumer confidence and increasing financing costs are likely to put pressure on growth."
Christine Lagarde pointed out that current economic conditions may actually justify an interest rate increase at today's meeting, and stated that the ECB Governing Council discussed this option, but the step was abandoned for now due to tightening financing conditions.
Lagarde announced that the ECB Governing Council unanimously decided to keep interest rates constant today in order to comprehensively evaluate the new data to come, and stated that whether a new step will be taken in December depends on the data to be announced in the next six weeks.
Emphasizing that the direction that interest rates will follow if there is no radical change in the policy basis is quite clear for everyone and is in full compliance with the expectations in the futures markets, Lagarde reminded that the bank is still in the moderate tightening phase.
"Inflation risks are on the upside, growth is under pressure"
Lagarde stated that the resilient structure of the service sector, artificial intelligence investments and public expenditures on the defense industry support the economic outlook, but pointed out the risk of permanent spread of high energy prices to other sectors of the economy.
Stating that headline inflation will remain significantly above the target in the coming quarters, Lagarde stated that wage increases maintain their moderate course between 2.5 percent and 2.8 percent.
Lagarde also touched upon the importance of the indirect and second-round effects of high energy prices and stated that at this stage, they have not observed any extra second-round effects other than those foreseen in the September projections.
Stating that they are closely monitoring the rise in long-term bond interest rates and the increase in interest rate spreads in some countries, especially France, Lagarde underlined that highly indebted countries should harmonize their budget plans with the EU financial framework and take the high interest rate environment into account.
"He is on duty until February 7"
At the end of the meeting, answering the question of whether the frequent departure of ECB Board members before the end of their terms of office indicates a weakness in the bank's corporate governance, Lagarde said that the institutional structure of the institution is "solid as a rock".
Emphasizing that business continuity is the most fundamental principle of the ECB, Lagarde said:
"Everyone should be of good cheer. I will be at my job until February 7, focused on the task, without making any reservations or excuses. There is never a right time to leave. However, I want to have the freedom to make my voice heard, to speak more freely and to take action on issues other than monetary policy, not only in Europe but around the world, in line with the principles that I feel close to my heart. There are many excellent candidates who are much better than me and who are all satisfactory. Therefore, never worry about business continuity or decisions being suspended. This institution "It is solid, it is strong, and it will remain so."
On the other hand, just a few hours before the interest rate decision, it was announced that ECB President Christine Lagarde would leave her post early.
In the statement made by the ECB, it was announced that Lagarde, whose term of office will expire in October 2027 under normal circumstances, will leave her job as of February 7, 2027.
