Lagarde Warns Energy Crisis Threatens European Economy

European Central Bank President Christine Lagarde has warned that the current energy crisis poses the most immediate threat to the European economy. She said crises that once occurred separately are now increasingly connected and capable of reinforcing one another.

The pandemic gave rise to pressures on energy and raw materials, which were then exacerbated by the invasion of Ukraine, worsening the energy crisis and inflation surge. Lagarde stated, 'Crises no longer follow one after the other, they are interconnected and mutually reinforcing.'

The ECB's priority remains price stability, but the current energy shock is affecting both prices and economic growth. Lagarde emphasized that a central bank cannot resolve the underlying energy supply problem, saying, 'A central bank cannot reopen the Strait of Hormuz or create new oil or gas reserves.'