Economic Buzz: ECB President Christine Lagarde highlights exceptionally high levels of uncertainty

European Central Bank President Christine Lagarde has highlighted exceptionally high levels of uncertainty. She noted in a speech that established certainties about the international order have been upended. Some alliances have become strained while others have drawn closer. We have seen political decisions that would have been unthinkable only a few months ago. An index of trade policy uncertainty currently stands at close to 350, more than six times its average value since 2021. And indicators of geopolitical risk stand at levels not seen since the Cold War, outside of wars and major terrorist attacks. This new environment raises fundamental questions for monetary policy, according to Lagarde. She further noted that in an environment of uncertainty, a strong commitment to maintaining price stability over the medium term is more important than ever.

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