"Growth in the euro area nearly stalled in early 2023 and domestic demand remains weak. Activity is being supported by lower energy prices, easing supply bottlenecks and fiscal policy support to firms and households ... Domestic demand, especially consumption, remains weak. Business and consumer confidence indicators point to weak activity in the 2nd quarter and remain lower [than before the start of Russia's military operation in Ukraine in February 2022]," Lagarde said during a session of the committee on economic and monetary affairs of the European Parliament.
The ECB head also called on EU countries to roll back support measures to boost demand and avoid higher inflationary pressures in the medium term.
At the same time, headline inflation declined from its October peak and stood at 6.1% in May, Lagarde stated, adding that the ECB is determined to "timely" achieve a target of 2%.
In March, the ECB set the inflation target of 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025.