A rise in European defense spending in response to doubts about the reliability of the U.S. as an ally could push inflation higher, but tariffs might have the opposite effect, the ECB President said.

European Central Bank president Christine Lagarde said the ECB was likely to miss its 2 per cent inflation target more often in the future as policymakers are forced to wrestle with “exceptionally high” uncertainty.

European Central Bank President Christine Lagarde said, "in an environment of uncertainty, a strong commitment to maintain price stability over the medium-term is more important than ever," as abrupt shifts in global trade and the region's defense architecture will make it harder to keep inflation stable.

Following is the text of European Central Bank President Christine Lagarde's statement after the bank's policy meeting on Thursday: Link to statement on ECB website: Good afternoon, the Vice-President and I welcome you to our press conference.

European Central Bank President Christine Lagarde said abrupt shifts in global trade and the region’s defense architecture will make it harder to keep inflation stable.