Christine Lagarde is the president of the European Central Bank (ECB). In September 2025 she said she was looking "very attentively" at French bond spreads as France's fiscal position deteriorated and its ten-year government-bond yields climbed to 3.6%, on a par with Italy's. The ECB is the lender of last resort in all but name for European public debt; it has assembled an array of debt-buying programmes intended to keep the euro zone's bond markets stable and spreads between different countries' yields contained. The political bargain is that countries adhere to "macroeconomic reasonability" in return. But the backstop was never intended for the core economies—France and Germany—which ultimately stand behind the ECB's balance-sheet.
In an interview with The Economist on March 25th 2026, Ms Lagarde warned that expectations of a swift return to normal energy supplies were "overly optimistic". The ECB's technical experts believed "too much has already been damaged" and that there was "no way" the Gulf's lost energy supply could be restored within months; the disruption could last "years". She said the ECB was "well positioned to respond" on monetary policy, but was more concerned about government budgets: there is "not as much fiscal space" as in 2022-23, when countries spent 2.5% of GDP or more to cushion energy costs after Russia's invasion of Ukraine. Any support should be "tailored, targeted and temporary" and focused on low-income households.
Ms Lagarde detects echoes of the 1920s, when America turned inward. She is partially a "Carneyist"—agreeing with Mark Carney, Canada's prime minister, that the old order is breaking down, but resisting the idea that it must be rebuilt from scratch. Multilateral institutions such as the IMF, World Bank and WTO, she argues, can still be repaired even if America's "dominance" within them must diminish. Her priorities for Europe are a true single market, deeper and more efficient capital markets, and a digital euro. She views the recently proposed "28th regime"—a unified rule book for the EU—as lacking ambition. She brushed aside suggestions from Jordan Bardella of France's National Rally that the ECB could tailor monetary policy to individual countries: there is "no chance in the world" of that.
People who take cold baths never have rheumatism, but they have cold baths.