Lagarde Reiterates Measured Approach to Tackle Euro Zone Inflation

ECB Chief Christine Lagarde has emphasized that a moderate policy response from the European Central Bank is still appropriate to combat inflation in the euro zone. Speaking at a European Parliament committee hearing, she stated that while this year's inflation surge may approach 4% by the end of the year, double the bank's target, there are no signs yet that it has become embedded.

Lagarde pointed out that surging oil and gas prices stemming from the US-Iran conflict are the main driver of higher prices. She added that 'we do not see evidence at this stage of energy prices feeding into higher wages.'

The ECB chief acknowledged that risks were skewed towards higher inflation, but cautioned against offering generous subsidies to help shield consumers against higher energy costs. Lagarde noted that fiscal support has now increased to around 0.1 percentage points of euro zone GDP and the measures are far less temporary or targeted than hoped.