ECB President Christine Lagarde signaled that policymakers will remain vigilant against inflation risks stemming from the Iran war while avoiding hasty decisions in the face of heightened uncertainty. In an interview with France2, Lagarde said the ECB will ensure the conflict does not trigger the kind of inflation shock the Eurozone experienced after Russia’s invasion of Ukraine.
“We are in an economic situation that’s different,” Lagarde said, adding that the Eurozone now has a “greater capacity” to manage disruptions. She emphasized that the ECB will take the necessary steps to keep inflation under control and avoid a repeat of the sharp price increases seen in 2022 and 2023 following the energy crisis triggered by the Ukraine war.
At the same time, Lagarde acknowledged that the current geopolitical environment makes policymaking particularly challenging. With the Iran conflict adding new uncertainty to global energy markets, she said it was impossible to predict the outcome of the ECB’s March 18–19 policy meeting. “There is so much uncertainty that I’d be incapable to say precisely what we will decide,” she said.
Lagarde added that the degree of volatility currently facing policymakers is unusually high, even compared with the turbulence seen during the 2022 energy shock. Nevertheless, she rejected the suggestion that Europe is heading toward stagflation, insisting that the ECB remains committed to maintaining price stability while navigating the heightened uncertainty.
