Lagarde Warns Eurozone Inflation Will Persist Amid Middle East Tensions

European Central Bank (ECB) President Christine Lagarde warned that eurozone inflation will likely remain elevated for longer than expected due to ongoing Middle East tensions and energy market volatility.

In an interview with Ouest-France, Lagarde stated that the current shock is 'longer-lasting' and attributed it to factors such as the Iran war, continued conflict in the region, and destruction of refining capacity, particularly in Russia.

The ECB raised interest rates this week for the second time since the Iran war drove prices sharply higher, with the deposit rate now standing at 2.5%.

Lagarde emphasized that policymakers must respond to inflationary pressure due to the resilience of the euro-area economy.