Lagarde says sustainable finances key for economic stability

Published Sat, Oct 17, 2026 · 04:16 PM

[BANGKOK] European Central Bank (ECB) president Christine Lagarde stressed the importance of sound public finances when she addressed ministers in charge of budgets from around the world in Thailand.

In her statement to the International Monetary and Financial Committee that comprises global finance ministers and central bankers, she argued that fiscal sustainability remains a “crucial anchor” for broader economic stability. 

“It is important to maintain sound fiscal policies, including by adhering to fiscal rules, and, where debt is high, to consolidate, re-prioritise spending and enhance the efficiency and effectiveness of public finances to rebuild buffers,” Lagarde said, according to a text published by ECB.

“Governments should strive to ensure that any fiscal response to the energy shock is temporary, targeted and tailored.”

Her remarks come after a week of intense debate in the Thai capital, where the International Monetary Fund held its annual meetings. Discussions focused on the risks hanging over the global economy as it faces rising debt levels, an artificial intelligence revolution and increasingly complicated geopolitics. 

“A return to an international economic order grounded in openness, predictability and the rule of law would help trade and investment flourish,” Lagarde said.

Governing Council member Olli Rehn made a similar pledge at a separate event.

“In a time of geoeconomic fragmentation, international cooperation is more important than ever,” he said on a panel. “For both Asia-Pacific and for Europe, an open rules-based trading system is essential.”

Turning to the eurozone economy, Lagarde reiterated ECB’s latest analysis that risks to the economic outlook are on the downside, while inflation risks are pointing upward.

“The energy shock is too large to ‘look through’ but a measured response remains appropriate to keep inflation in check,” she said. Rehn said “monetary policy will act with a steady hand, delivering price stability and thus supporting sustainable growth”.

ECB raised interest rates twice – in June and September – and is widely expected to deliver another hike at the end of the year. 

“I’m of the opinion that the job isn’t done so far,” said Governing Council member Joachim Nagel. “Maybe we have to do a little bit more, but we have this really good meeting-by-meeting approach that serves us well in this complicated world.”

Lagarde also said that more than 30 central banks have expressed interest in the Eurosystem’s enhanced repo facility, which aims to support the smooth transmission of monetary policy and reinforces the international role of the euro. BLOOMBERG