Lagarde: ECB sticks to “middle path” as inflation outlook worsens

European Central Bank President Christine Lagarde stated on Monday that the bloc's economy has continued to grow across countries and sectors, with manufacturing and the labor market performing well. She cautioned that inflation will be higher than initially anticipated in 2027 and 2028, but there is no evidence yet that price pressures are entrenched, making a measured policy response suitable.

Growth has been widespread among most countries and industries, a trend expected to persist in the third quarter. Manufacturing is thriving, while the labor market remains robust. Although major technological breakthroughs haven't reduced employment, the impact of artificial intelligence remains uncertain at present. Despite the high uncertainty surrounding the outlook, the ECB maintains a "middle path" for monetary policy, as Lagarde had previously outlined.