ECB's Measured Approach to Tackling Euro Zone Inflation

European Central Bank (ECB) President Christine Lagarde emphasized that a measured approach is necessary to address inflation, which has surged past 3% in the euro zone. In a recent hearing with the European Parliament committee, she stated that there are no signs of second-round effects yet.

Lagarde acknowledged that risks are skewed towards higher inflation, citing surging oil and gas prices as the main driver of higher prices. She noted that while subsidies can help lower inflation in the short term, they often prolong inflation over a longer period and push up fiscal expenditure.

The ECB chief emphasized that interest rates will not move in lockstep with energy costs, reiterating her earlier message. Economists expect the ECB to sit out its October 29 meeting and hike only in December, when new projections are released.