Christine Lagarde, President of the European Central Bank (ECB), announced that key rates will be kept the same after the December policy meeting. She highlighted that the ECB agrees on the need to stay flexible because of ongoing changes in the economy. Investment continues to be strong, mainly due to growth in artificial intelligence. Exports are also performing well, despite earlier doubts about their stability.

Increase In Economic Uncertainty

Lagarde pointed out rising economic uncertainty, which means the ECB must think about all possible strategies for the future. She mentioned that salary trends will be closely watched going forward. The ECB chose not to provide forward guidance because economic conditions are too unpredictable. This means they won’t specify when they might change their policies. Without clear direction from the ECB, we can expect a lot of market fluctuations as we enter the new year. The absence of forward guidance may lead to increased options pricing on the Euro Stoxx 50 and the EUR/USD pair. In this kind of environment, strategies that profit from market movements—rather than a specific direction—are more likely to succeed. This cautious approach aligns with the latest data. Eurostat’s preliminary data for November 2025 revealed that inflation rose to 2.9%. Additionally, wage growth for Q3 remained high at 4.7%. Unless salary growth lowers significantly, the ECB is unlikely to change its policies.

Economic Divergence

We see the economic divide as mentioned, with AI investment and solid exports keeping some sectors strong. Germany’s recent IFO survey from early December supports this, revealing a surprising rise in manufacturing export expectations. This suggests that, even if the overall economy appears stagnant, sectors like technology and industrial exports might continue to thrive. This situation resembles the pauses we saw from central banks in 2023, when markets reacted intensely to every new piece of information. We should expect similar conditions ahead, where key data on wages and inflation will heavily influence market activity. Trading around these data releases will be more crucial than trying to guess the ECB’s next big move. Create your live VT Markets account and start trading now.

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