ECB President Christine Lagarde warned that elevated energy prices are no longer confined to fuel markets and are increasingly feeding into broader inflation across the Eurozone economy. Speaking to France Culture on Monday, Lagarde said the indirect effects of inflation have become visible “more or less everywhere” in recent weeks, highlighting growing concerns that the energy shock triggered by geopolitical tensions is becoming more deeply embedded.
Her comments reinforce the ECB’s recent focus on second-round inflation effects, where higher energy costs gradually pass through to transportation, production and consumer prices. Such spillovers complicate the policy outlook as policymakers assess whether inflation pressures will ease naturally as oil prices retreat or persist even after the initial shock fades.
At the same time, Lagarde welcomed the latest announcement that Washington and Tehran had reached an agreement to end the conflict, describing it as “good news.” She said any peace deal that helps restore normal traffic through the Strait of Hormuz should be viewed positively, adding that geopolitical tensions globally appear to be “easing”. However, her remarks suggest the ECB remains alert to the possibility that inflationary damage has already spread beyond energy markets, even as oil prices decline.
