The President of the European Central Bank (ECB), Christine Lagarde, expressed that reaching the sustainable 2 percent inflation target will take place within the year 2025 as long as there is no significant shock. In an interview with the French Le Monde newspaper published on the ECB website, Lagarde noted that a critical report by former ECB President Mario Draghi regarding the competitiveness of the European economy in the face of global developments reflected reality. Lagarde explained that Draghi’s report highlighted the productivity gap stemming from the technology sector and emphasized the need for efforts to retain companies that start in Europe and later develop elsewhere. Lagarde pointed out that Europe was lagging behind and stressed the importance of focusing on understanding why Europe was falling behind.

Lagarde specifically mentioned the significant energy demands created by data centers and noted that energy was a crucial factor alongside workforce and mobility, where the United States excelled. She also pointed out the importance of regulations. Lagarde mentioned that the US was making rapid strides in artificial intelligence and had significant players in the field, while Europe had not such significant players but had taken the lead in artificial intelligence regulation. Due to these regulations, Lagarde emphasized that companies in the sector often moved to regions with fewer obstacles and restrictions. Regarding the current situation in the European economy, Lagarde stated that they did not observe recession signs for the continent’s economy either this year, in 2025, or 2026. Lagarde highlighted that the battle against inflation was far from over, mentioning that inflation had decreased from 10.6 percent two years ago to 1.7 percent now. She assessed that they could have started interest rate hikes a few months earlier and succeeded in significantly reducing inflation at the fastest rate so far. Lagarde indicated her desire for the inflation rate to reach the 2 percent target on a sustainable and permanent basis, stating, “As long as there is no significant shock, this will happen by the year 2025.”

FIRST COMMENT ON BRICS’ NEW PAYMENT SYSTEM Lagarde addressed a question regarding the efforts of BRICS countries to establish a payment system to reduce the use of the dollar, stating that it would require another country capable of assuming the role of a reserve currency. Lagarde mentioned that China was preparing for this role but was not yet ready.