The U.S.'s lead in AI development will ultimately rely on European markets, ECB President Christine Lagarde says at a forum held by the central bank in Sintra, Portugal. "I think that we are all sort of hostage to each other, if I may say, because we need those frontier companies, but they need the markets." Lagarde expects healthy competition between the U.S. and Europe as the AI economy develops, with much of the supply chain yet to be determined. "We are in this game together," she says. AI is likely to have a radical impact on productivity going forward, and the ECB will need to determine its inflationary impact, Lagarde adds. "It might be disinflationary first and inflationary second, or probably more so the other way around." (don.forbes@wsj.com)