Christine Lagarde on Inflation
TL;DR
Christine Lagarde is committed to delivering the European Central Bank's primary objective of stabilizing inflation at the two percent medium-term target.
Key Points
Inflation fell to 1.7% in January 2026, down from 2.0% in December 2025, due to lower energy and services inflation.
The ECB continues to expect inflation to stabilize at the 2% target over the medium term, as projected in late 2025.
The central bank pays close attention to perceived inflation, noting that in December 2025, the median perception was 3.2% while HICP inflation was 2.0%.
Summary
Christine Lagarde, as President of the European Central Bank, maintains a strong focus on bringing inflation back to the symmetric 2% medium-term target, considering her efforts effective as inflation has fallen markedly from its peak. Despite measured inflation standing at 1.7% in January 2026, she notes that surveys show many citizens still perceive prices to be rising faster, a gap that has implications for economic behaviour and trust in institutions. The central bank's approach remains data-dependent and determined, with interest rate decisions based on the inflation outlook and the strength of monetary policy transmission, rather than pre-committing to a specific rate path.
She identifies several reasons for the divergence between actual and perceived inflation, notably that personal consumption patterns cause frequent purchases like food to weigh more heavily on perceptions, and psychological factors can bias perceptions upwards. To address this, Lagarde emphasizes that the primary action is delivering on the 2% inflation mandate, supported by effective, accessible communication about policy, and advocating for increased financial education across Europe to improve public understanding.
Key Quotes
Our efforts to bring inflation down have been effective
We are determined to ensure that inflation stabilises at our two per cent target in the medium term
The ECB pays close attention to households' inflation perceptions — not only because these have an impact on economic activity and expectations, but also to ensure that we continue to earn the trust of the people we serve
Frequently Asked Questions
Christine Lagarde's current stance is a commitment to ensuring inflation stabilizes at the European Central Bank's 2% medium-term target. She views the aggressive monetary policy response as effective, given the marked decline from the peak inflation levels.
Her core mandate to target 2% inflation has not changed, but her public commentary has shifted to focus on the divergence between official inflation data and public perception. She continues to apply a data-dependent approach to setting interest rates.
She stated that Eurosystem staff projections from December 2025 indicated headline inflation averaging 1.9% in 2026 before returning to 2.0% in 2028. She stresses that interest rate decisions are made meeting-by-meeting without pre-committing to a particular path.
Sources7
Lagarde: Falling inflation still doesn't feel 'real' for households
Hearing of the Committee on Economic and Monetary Affairs of the European Parliament
ECB expects food inflation to settle just above 2% in 2026
Factbox: ECB policymakers play down swift action to combat inflation
Christine Lagarde: ECB press conference - introductory statement
Lagarde says ECB must always be on the lookout for signs of inflation
* This is not an exhaustive list of sources.