Lagarde Sticks to Measured Approach on ECB Inflation Response

European Central Bank (ECB) President Christine Lagarde is sticking to a measured approach in addressing inflation concerns, despite rising prices across the euro zone. Inflation has surged past 3% and may reach 4% by the end of the year, double the ECB's target.

Lagarde emphasized that the current inflation surge is largely driven by high energy costs stemming from the US-Iran conflict, rather than embedded wage growth. She argued that a moderate policy response remains appropriate to keep inflation in check.

The ECB chief noted that risks are skewed towards higher inflation and warned against generous subsidies offered by governments to shield consumers against higher energy costs. These measures can prolong inflation over a longer period and push up fiscal expenditure, causing more lasting issues.