Lagarde Says ECB Will Stick to Measured Steps on Inflation

ECB chief Christine Lagarde said on Monday that inflation in the euro zone has yet to generate dangerous second-round effects, justifying a moderate policy response from the European Central Bank.

The current inflation surge, which has already exceeded 3% and may reach as high as 4% by year's end, is largely driven by surging oil and gas prices stemming from the US-Iran conflict, Lagarde argued. She noted that there are no signs yet of energy prices feeding into higher wages.

Lagarde emphasized that while a measured response to inflation is appropriate, she did not detail what exactly this entails. Economists suggest that the first two rate hikes by the ECB, which came three months apart, serve as a guide.