ECB’s Lagarde: Europe labor market in surprisingly good condition

European Central Bank (ECB) President Christine Lagarde spoke on Saturday at the US Federal Reserve’s annual symposium in Jackson Hole, Wyoming. Lagarde stated that Europe’s labor market has performed far better than expected, despite soaring inflation and steep interest-rate hikes in recent years, according to Reuters. 

Lagarde added that employment expanded by 4.1% between the end of 2021 and mid-2025, nearly as much as the economy and roughly twice as much as an established economic rule would suggest. 

Key quotes

Inflation has fallen sharply, and at a remarkably low cost in terms of employment.

By understanding the sources of recent resilience, we can be better prepared for the next shock, whatever shape it may take. Looking ahead, it is difficult to say with confidence whether the patterns of recent years will persist. 

The European labor market has come through recent shocks in unexpectedly good shape.

But we should be cautious in assuming that this unique constellation of forces will last.

Market reaction

At the time of press, the EUR/USD pair was down 0.08% on the day at 1.1710.