Lagarde: The process of reducing inflation in the eurozone has now ended, and trade uncertainties have significantly diminished.

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On Thursday, the European Central Bank kept interest rates unchanged for the second time and lowered its inflation forecast for 2027, believing that inflationary pressures are under control, which increased market speculation about a rate cut by the end of the year.

At the subsequent press conference, ECB President Lagarde stated that the disinflation process in the eurozone is now over and trade uncertainties have significantly diminished, and reiterated the ECB's policy statement that decisions will be made on a meeting-by-meeting basis.

Lagarde said the interest rate decision was adopted unanimously. Afterwards, traders reduced their bets on the ECB's easing policy, betting that the ECB's rate-cutting cycle may have ended.

On trade, Lagarde said that recent trade agreements have reduced uncertainty, and the impact of these agreements will become clearer over time.

Lagarde said that trade uncertainty has significantly subsided, but trade tensions could lead to greater volatility and risk aversion in the financial markets.

Lagarde said the economy is growing thanks to resilient demand. GDP data reflects an early boost in the first quarter. Consumer spending and investment will benefit from previous rate cuts, and economic headwinds should abate next year.

Recent surveys show growth in both manufacturing and services, the labor market remains a strong source, and moderate wage growth helps contain domestic price pressures. Leading indicators suggest wage growth will slow further, and core inflation metrics are in line with the 2% target.

On inflation, Lagarde said that inflation is at the level we desire, the disinflation process has ended, and a strong euro may cause inflation to fall more than expected.

Lagarde cautioned that higher tariffs, a strong euro, and competition will dampen economic growth, and that investment should be supported by government spending.

Regarding recent bond market volatility, Lagarde said the eurozone sovereign bond market is orderly, liquidity is smooth, and the balance sheet reduction process is progressing smoothly.

The money market is pricing in a 50% chance of a 25 basis points rate cut by the ECB in June 2026, down from about 60% before the ECB statement.

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