Lagarde Reiterates ECB Well Placed But Monitoring Oil Swings

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(Bloomberg) — The European Central Bank is well placed to tackle “exceptionally high” uncertainty but will closely watch gyrations in commodities markets as tensions in the Middle East flare, President Christine Lagarde said.

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Addressing European lawmakers in Brussels, Lagarde said inflation is set to stabilize around the 2% goal and risks to economic growth remain tilted to the downside.

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“At the current interest-rate levels, we believe that we are in a good position to navigate the uncertain circumstances,” she said Monday. “Especially in the current conditions of exceptional uncertainty, we will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.”

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The comments reaffirm Lagarde’s position after a weekend in which the US launched  strikes on Iran’s nuclear infrastructure — sending oil prices higher and throwing the global economic outlook into question.

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She acknowledged that the fighting in the Middle East could see a significant portion of energy supplies via the Strait of Hormuz impaired, risking secondary effects for prices.

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“This is a source of concern and it’s a point that we have to monitor very carefully,” Lagarde said.

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She also repeated that weakness in the dollar since President Donald Trump unveiled sweeping tariffs offers the euro an opportunity to boost its international standing.

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After eight rate cuts in a year, ECB officials are weighing whether to lower borrowing costs further. While Lagarde said in early June that the easing campaign is nearing an end, some policymakers reckon more may be needed to support the 20-nation economy.

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Surprisingly strong expansion of 0.6% at the start of 2025 was partly down to exporters front-running US tariffs. Data earlier Monday showed the euro zone’s private sector barely grew this month as trade and geopolitical uncertainty keeps companies from from investing and households from spending.

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Investors and analysts reckon the key deposit rate will be left at 2% next month, but they’re leaning toward one more quarter-point cut before year-end.

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“We are not pre-committing to a particular rate path,” Lagarde said.

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(Recasts with more Lagarde comments.)

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