ECB: Christine Lagarde: IMFC Statement

The summary above is from the announcement ECB published on October 17, 2026.

What the announcement says

The global economy has proven surprisingly resilient in the face of high uncertainty. The conflict in the Middle East continues to expose energy markets to sharp swings. Trade tensions and protectionist measures are weighing on confidence and contributing to a reconfiguration of trade flows. The global economy has held up thanks in part to the rise of artificial intelligence, with investment in technology supporting activity and trade, particularly in economies integrated into technology value chains. Risks nonetheless remain tilted to the downside for growth and to the upside for inflation. A return to an international economic order grounded in openness, predictability and the rule of law would help trade and investment flourish.

Despite global headwinds and the ongoing energy shock, the euro area economy has so far proved resilient. Growth was broad-based across most euro area countries and sectors in the first half of 2026. The September ECB staff projections foresee growth of 0.9% in 2026, 1.4% in 2027 and 1.5% in 2028.

As the energy shock fades over the medium term, the projections see domestic demand benefitting from a recovery in real income over the medium term, driven by lower energy inflation and a resilient labour market. Rising government spending on infrastructure and defence, complemented by investment in AI and digital technologies, should also support growth. Export growth should pick up on the back of strengthening foreign demand, also driven by AI.

The medium-term outlook is surrounded by uncertainty over how intense and long-lasting the Middle East conflict will be, and how the resulting shocks might propagate through the economy. Risks to growth are assessed to be on the downside.

Fiscal sustainability remains a crucial anchor for broader economic stability. It is important to maintain sound fiscal policies, including by adhering to fiscal rules, and, where debt is high, to consolidate, re-prioritise spending and enhance the efficiency and effectiveness of public finances to rebuild buffers. Governments should strive to ensure that any fiscal response to the energy shock is temporary, targeted and tailored.

In addition, policies that strengthen resilience to climate change can improve the economy’s ability to absorb climate-related shocks. These efforts should be complemented by structural policies that promote labour market participation, equip the workforce with the skills needed in an AI-driven economy and facilitate the diffusion of new technologies. Priorities include advancing the savings and investments union, improving access to risk capital and creating better conditions for innovative firms to scale up across the Single Market.

Headline inflation increased to 3.8% in September, mostly reflecting a surge in energy inflation, and, to a lesser extent, an increase in food and services inflation. Core inflation increased slightly to 2.5%. The range of underlying inflation measures remained broadly stable in September and wages have so far shown no material response to the energy shock.

Looking ahead, higher energy prices are expected to keep headline inflation well above target into the first half of 2027 and to gradually feed through to core and food inflation. Headline inflation is expected to decline after the first quarter as energy inflation falls, returning to around target towards the end of 2027. The risks to the inflation outlook are to the upside due, in particular, to the Middle East conflict and Russia’s unjustified war against Ukraine. A more intense or persistent energy shock could strengthen indirect and second-round effects, resulting in higher and more persistent inflation. Extreme weather could push up food prices. By contrast, a sustainable resolution of geopolitical conflicts, weaker energy pass-through or more risk-averse financial markets could lower inflation.

ECB

Policy decisions and official commentary move currency and index pricing, and they shape the cost of holding a leveraged position.

Read the full announcement on ECB

Compiled automatically from the source listed below. Follow the link for the full announcement.