ECB Forecasts Prolonged Inflation in Eurozone Amid Middle East Conflict

European Central Bank (ECB) President Christine Lagarde warned that inflation in the eurozone will likely remain above target levels throughout the first half of 2027 due to economic impacts from the Middle East conflict.

The surge in energy prices and its spillover effects on goods and services prices are among the main factors contributing to high inflation, according to Lagarde.

The ECB kept its three key interest rates unchanged on Thursday, despite rising oil prices due to the escalation of the U.S. war against Iran.

Lagarde noted that economic activities in the eurozone have picked up in the second quarter, but growth will remain modest in the near term and medium-term fundamentals are solid.