Christine Lagarde warns euro zone economy faces risks between baseline and adverse scenarios

Apr 14, 2026, 2:09:29 PM UTC(2 days ago)

Impact: Medium

Affected Assets

European Central Bank President Christine Lagarde indicated that current economic conditions are tracking between the bank's standard baseline and a more severe adverse path due to persistent energy shocks
The adverse scenario projects inflation could peak at 4.4 percent in 2026 if disruptions in the Strait of Hormuz continue to impact oil and gas supplies
Economic growth forecasts for 2026 have been revised down to 0.9 percent as geopolitical tensions weigh on real incomes and business confidence
Markets have increased the probability of a rate hike by May 2026 to over 60 percent as policymakers debate the need for forceful action against entrenched price rises
ECB officials warned that the baseline scenario may now represent a best case outcome while the adverse path is increasingly likely to become the new reality

*LAGARDE: ECONOMY IS BETWEEN ECB'S BASELINE AND ADVERSE SCENARIO