At the Bank of Finland’s International Monetary Policy Conference, ECB President Christine Lagarde underscored the growing importance of “geoeconomics” in shaping monetary policy, noting that trade wars and geopolitical tensions now significantly influence economic outcomes. She highlighted that despite unprecedented US tariffs on European exports, the euro area has avoided major supply chain disruptions, partly due to limited retaliation, an appreciating euro, and strong domestic policy responses, including government investment and new trade agreements.
Lagarde stressed that while inflationary pressures remain contained, trade shocks could affect potential growth, real rates, and monetary policy space. She emphasized the need for agility, careful scenario analysis, and structural reforms—such as advancing the Single Market and supporting AI adoption—to bolster resilience. Drawing on Finland’s tradition of sisu, she concluded that sustaining economic stability requires determination, adaptability, and vigilance in the face of ongoing uncertainty.
