Lagarde Flags Shift from Global Risk to Uncertainty
Addressing the Global Risk Conference hosted by Johns Hopkins University in Italy, Lagarde noted that the ECB will preserve adaptability in monetary strategies amid rising geopolitical tensions, especially following intensified clashes in the Middle East after "US and Israeli strikes on Iran."
Her statements, shared on the European Central Bank website, underscored that decisions on interest rates will continue to be made on a meeting-by-meeting basis, informed by the latest economic indicators.
Lagarde highlighted that today's global conditions differ from earlier periods of manageable threats, suggesting that macroeconomic models designed for the relatively stable past decades are inadequate for shaping policy today.
She added that the ECB increasingly depends on scenario-based evaluations and flexible policy measures to steer through this evolving environment.
Drawing on history, Lagarde compared the present moment to the technological optimism of the 1920s – fueled by breakthroughs like the internal combustion engine and electricity – which ultimately coincided with geopolitical divisions culminating in the Great Depression.
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