ECB President Christine Lagarde addressed the public with a message that is rare for any central bank: “We’re doing just fine.” According to her, the current level of interest rates is just right — not too high, not too low, but exactly what is needed to maintain inflation stability and peace of mind in the markets.

Lagarde once again reaffirmed the ECB’s sacred benchmark — 2% CPI annually. The message was clear: we have reached it, we will keep it, and if needed, we will take action. What particular action was not specified, but the confidence in her tone was unmistakable.

Despite the broader global economic confusion, the ECB promises consistency and stability. Lagarde acknowledged that the weather in the global economy can change quickly, but in her words, Frankfurt is able to cushion the EU economy from external headwinds.

When asked where interest rates might go next, she responded diplomatically: for now, everything looks “strong and favorable”, at least enough to avoid any hectic moves. Since June 2024, the ECB has already cut the key refinancing rate eight times. Now, the time seems right to pause and take a breath.

Meanwhile, economists are speculating: if inflation is right where it should be, could we see one more rate cut before year end? But Lagarde evaded a straightforward answer.

It goes without saying, the burning issue of the euro’s forex rate versus the US dollar was raised. Lagarde dropped a hint that the single European currency has the potential to become the world’s leading reserve currency, but it will require a bit more effort from policymakers. Like any currency, the euro stands stronger when the economy is on a sound footing.

To sum up her speech, interest rates are put on hold, inflation is under control, and the euro has bullish long-term prospects.