by Oui
Thu Jan 1st, 2026 at 12:35:44 PM EST
Financial crisis 2️⃣0️⃣2️⃣6️⃣
Early June 2025 ...
ECB rate decision as it happened: 'We are in a good position,' Lagarde says after cutting rates to 2%
Asked if the ECB was done cutting rates, Lagarde said: "We are in a good position on the basis of the current trade path and with the 25 basis point cut that we decided, so that we can face the uncertainties that are coming our way. But as you have heard in the monetary policy statement, we will decide meeting by meeting on the basis of data."
Live coverage from Frankfurt now after the latest ECB interest rate cut | Reuters |
- The ECB cut interest rates to 2%
- It has cut rates eight times in just over a year
- ECB says inflation is under control
- President Christine Largade: 'We are in a good position'
- Read our wrap-up here
With borrowing costs in Europe's 20-country currency bloc now back at 2%, Lagarde's main message was that the bank's rates are now in a "good position" despite the extremely high uncertainty being caused by President Donald Trump's tariff threats.
The other main points to come out of the meeting were that Lagarde won't be leaving early to take up a job elsewhere. She not-so-subtly drove home that message by turning up at the press conference wearing a gold necklace with the words "'in charge" in large letters.
"I think we are getting to the end of a monetary policy cycle that was responding to compounded shocks, including Covid... the illegitimate war in Ukraine and the energy crisis," Lagarde said.
"But of course, we are now into a different time, with different players, with different partners, with different policies, and we will continue to analyse and assess and measure and make sure that we deliver on our 2% medium term target."
U.S. tariffs will impact predominately on 2026 growth and be offset by European military spending, Lagarde says
EU Economic Outlook: December 2025
Macro Watch - Can defence spending revitalise the eurozone economy? | AbnAmro |
The confluence of Germany's federal elections and the US pulling back from the decades-long transatlantic alliance is fomenting a revolution in European defence spending. Germany is abandoning fiscal frugality in the face of an existential threat to Europe's independence and security, while the EU is likely to significantly loosen the fiscal rules, supported by ca 0.8% of GDP in new common debt financing. In this note, we explore the potential impact of these changes for the near-term growth outlook. In the very near-term - at least for this year - the impact is expected to be small, but the fiscal boost could be potentially game-changing for 2026 and beyond. In a reasonable middle ground scenario, we think 2026 growth in the eurozone could be lifted by 0.3pp, or 0.4-0.5pp when including Germany's infrastructure spending plans. In a downside scenario, the boost would be only 0.1pp ...
Long March to War ... Repeated Every 100 Years? The Great Depression and Deutsche Wirtschaftswunder
Why Germany's economic miracle is facing a new reality | The Guardian |
In 1923, the country was rocked with hyperinflation, now the retreat from globalisation is exposing the fragility of its industrial model
Germany has come a long way in 100 years. Back in November 1923, people were trundling wheelbarrows stacked high with cash through its streets to buy a loaf of bread. Now its reputation is that of an economic powerhouse.
That episode of hyperinflation left deep scars on the nation's psyche. Government printing presses were working flat out to produce mountains of worthless bank notes and the currency collapse was so severe a single US dollar was worth 1tn marks. "Never again" has been the mantra ever since.
Germany's rebound from the triple shocks of the first half of the 20th century - the collapse of the currency in 1923, the Great Depression and defeat in the second world war - was remarkable. So spectacular was the recovery in the 1950s and 60s that a word was coined to describe it: Wirtschaftswunder - or economic miracle.
Analysis: Trump points to McKinley's tariffs as a success. History says otherwise
The McKinley Tariff, together with lavish expenditures on pensions and pork-barrel schemes, aroused resentment against the "Billion-Dollar Congress," and as a consequence the elections of 1890 brought a Democratic landslide. Yet the Republican losses, including his own, proved a blessing for McKinley. He quickly rebounded to become governor of Ohio for two terms, thereby gaining administrative experience while avoiding the stigma of further association with unpopular national policies. His growing prominence in the party led to his serving as chairman of the Republican National Convention in 1892 and to his winning enough support to be mentioned as a nominee for the presidency.
Grover Cleveland & the Panic of 1893
Panic of 1893
