ECB Press Conference: Lagarde speaks on policy outlook after keeping rates steady in December
|Christine Lagarde, President of the European Central Bank (ECB), explains the ECB's decision to leave key rates unchanged at the December policy meeting and responds to questions from the press.
Follow FXStreet's ECB Live Coverage here
ECB press conference key quotes
"Eurozone economy is resilient."
"Service-led growth to continue in near term."
"Domestic demand main growth engine in years ahead."
"Savings rate should come down."
"Government expenditure on infrastructure and defense should underpin investment."
"Global environment is likely to remain a drag."
"Underlying inflation remains consistent with 2% medium-term target."
"Wage growth to ease in coming quarters before stabilising below 3% towards end-2026."
"Most measures of longer-term inflation expectations continue to stand at around 2%."
"Trade tensions have eased but volatile environment remains a risk."
"Outlook for inflation continues to be more uncertain than usual."
"Stronger Euro could bring down inflation."
"We are in a good place, doesn't meant we are static."
"The decision was unanimous, including optionality."
"No set date for any move."
"There is some changes in the economy."
"Investment is the main driver, largely attributable to AI."
"Exports have surprised us, they have proven sustainable."
"Uncertainty may have worsened."
"All options should be on table."
"We'll look particularly attentive to salaries."
"We simply cannot offer forward guidance given uncertainty."
"No discussion on cut or hike today."
"We don't target exchange rate."
" We look carefully at appreciation of Euro."
"Situation of the Chinese currency is one we pay attention to."
This section below was published at 13:15 GMT to cover the European Central Bank's (ECB) monetary policy announcements and the immediate market reaction.
The European Central Bank (ECB) announced on Thursday that it left key rates unchanged following the December policy meeting, as expected. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.15%, 2.4% and 2%, respectively.
Key takeaways from ECB policy statement
" New Eurosystem staff projections show headline inflation averaging 2.1% in 2025, 1.9% in 2026, 1.8% in 2027 and 2.0% in 2028."
"Updated assessment reconfirms that inflation should stabilise at the 2% target in the medium term."
"For inflation excluding energy and food, staff project an average of 2.4% in 2025, 2.2% in 2026, 1.9% in 2027 and 2.0% in 2028."
"Inflation has been revised up for 2026, mainly because staff now expect services inflation to decline more slowly."
"ECB is determined to ensure that inflation stabilises at its 2% target in the medium term."
"Economic growth is expected to be stronger than in the September projections, driven especially by domestic demand."
"Growth has been revised up to 1.4% in 2025, 1.2% in 2026 and 1.4% in 2027 and is expected to remain at 1.4% in 2028."
"Will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance."
"Interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it."
"Not pre-committing to a particular rate path."
"APP and Pandemic Emergency Purchase Programme (PEPP) APP and PEPP portfolios are declining at a measured and predictable pace, as Eurosystem no longer reinvests principal payments from maturing securities."
Market reaction to ECB rate decision
EUR/USD recovered from session lows with the immediate reaction to the ECB policy announcements and was last seen trading virtually unchanged on the day at 1.1736.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | -0.19% | -0.08% | 0.10% | 0.56% | 0.57% | -0.25% | |
| EUR | -0.04% | -0.21% | -0.11% | 0.05% | 0.54% | 0.53% | -0.28% | |
| GBP | 0.19% | 0.21% | 0.21% | 0.28% | 0.77% | 0.75% | -0.07% | |
| JPY | 0.08% | 0.11% | -0.21% | 0.17% | 0.65% | 0.62% | 0.04% | |
| CAD | -0.10% | -0.05% | -0.28% | -0.17% | 0.49% | 0.48% | -0.20% | |
| AUD | -0.56% | -0.54% | -0.77% | -0.65% | -0.49% | -0.02% | -0.83% | |
| NZD | -0.57% | -0.53% | -0.75% | -0.62% | -0.48% | 0.02% | -0.81% | |
| CHF | 0.25% | 0.28% | 0.07% | -0.04% | 0.20% | 0.83% | 0.81% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
This section below was published as a preview of the European Central Bank's (ECB) monetary policy decisions at 04:00 GMT.
- The European Central Bank is expected to hold key rates unchanged for the fourth consecutive meeting on Thursday.
- ECB President Lagarde is unlikely to offer fresh clues in the press conference following the announcement.
- EUR/USD could revisit the year’s peak at around 1.1920 in the upcoming days.
The European Central Bank (ECB) is holding its last two-day meeting of the year and will announce its monetary policy decision on Thursday. Financial markets anticipate the central bank will keep interest rates unchanged for the fourth consecutive meeting after reducing them on the main refinancing operations, the marginal lending facility, and the deposit facility in June to 2.15%, 2.4%, and 2%, respectively.
The ECB will also present fresh macroeconomic projections, with the focus on growth and inflation. Finally, ECB President Christine Lagarde will hold a press conference to explain the reasoning behind policymakers’ decision.
Ahead of the announcement, the EUR/USD pair trades with a positive bias, despite a near-term retracement, driven mainly by broad US Dollar (USD) weakness.
What to expect from the ECB interest rate decision?
The ECB has been among the first to cut interest rates and reach a neutral rate. President Christine Lagarde has repeatedly stated that monetary policy is in a “good place,” meaning it is well-positioned to address the current macroeconomic environment. Still, Lagarde has left the door open to any required direction, stating that decisions are data-dependent and that there is a meeting-by-meeting approach with no predetermined path.
There are good reasons to believe that she will stick to such a message: On the one hand, the Governing Council has noted that, despite headwinds, the Euro area economy has shown notable resilience. On the other hand, inflation has indeed been higher than expected, but held within reasonable levels. According to the latest Harmonized Index of Consumer Prices (HICP), annualized inflation rose by 2.1% in November, while the core annual HICP remained stable at 2.4%.
With no changes in interest rates and, most likely, in Lagarde’s words, investors will be taking clues from economic projections. Relative to September’s projections, both inflation and growth have been higher than expected. Yet as noted, inflation at 2.1% YoY is not a concern. Policymakers are likely to revise Gross Domestic Product (GDP) and HICP projections, with inflation most likely revised higher this year and lower in the next two years.
Regarding growth, policymakers seem more optimistic than the recent figures suggest. The latest Hamburg Commercial Bank (HCOB) Purchasing Managers’ Index (PMI) readings show economic progress remains tepid across the bloc. A rise in Eurozone business activity in December completed a full calendar year of growth for the first time since the COVID-19 pandemic, according to provisional PMI survey data. That said, the latest expansion in output was modest and the slowest in three months. GDP revisions will be interesting to see.
Finally, speculative interest will be watching whether officials maintain the hawkish view that denies the odds for additional rate cuts in the foreseeable future.
Analysts at BNP Paribas noted: “The publication of the new macroeconomic projections should also confirm the upward revision of growth forecasts for 2026. Against this backdrop, we believe that the ECB is unlikely to cut its policy rate any further and that its next move could even be an increase (in Q3 2027). This environment, against a backdrop of more expansionary fiscal policy in Germany, should lead to additional upward pressure on bond yields in 2026, with the 10-year Bund exceeding 3% in the second half of 2026, according to our forecasts.”
How could the ECB meeting impact EUR/USD?
As previously noted, the EUR/USD pair trades with a modest bullish bias heading into the year-end. Generally speaking, a hawkish ECB monetary policy decision should back demand for the Euro (EUR), while a dovish outcome should put pressure on the local currency. The general consensus is that the ECB will maintain its hawkish stance, particularly if President Lagarde repeats the message that the ECB is in a good place, coupled with downward revisions to inflation and upward revisions to growth expectations.
Valeria Bednarik, FXStreet Chief Analyst, notes: “From a technical point of view, the EUR/USD pair is mostly bullish, although solely depending on USD demand. The EUR has little life of its own lately, and the ECB announcement will likely have a reduced impact on the EUR.”
Bednarik adds: “Within the ECB decision, the US will release the Consumer Price Index (CPI), which may trigger some volatile price action. Higher-than-anticipated inflation figures will likely boost speculation of additional rate cuts in the US, leading to some USD weakness, while the opposite scenario is also valid. Keeping that in mind, EUR/USD peaked at 1.1804 this December, the immediate resistance level. Once beyond it, the pair may retest the 2025 peak at 1.1918. Near-term support lies at 1.1690, followed by the 1.1620/40 price zone. A slide towards the latter should attract buyers.”
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.