Europe has become more resilient to external shocks, giving the European Central Bank more time to decide when inflation requires another interest rate increase, according to President Christine Lagarde.
Speaking at the ECB’s annual forum in Sintra, Lagarde said stronger banking regulation, improved fiscal frameworks and investment in low carbon energy had helped contain the economic effects of recent disruptions.
She pointed to the collapse of Silicon Valley Bank, US tariffs and the recent oil supply shock as events Europe absorbed without broader financial instability.
That resilience means the ECB may increasingly operate between shocks it can temporarily overlook and those that require a forceful response.
Lagarde said better real time data and more reliable inflation projections allow policymakers to assess whether price pressures are becoming persistent before changing rates.
