Lagarde Warns of Inflation Risks Amid Eurozone Price Surge

European Central Bank President Christine Lagarde emphasized that eurozone inflation has not yet triggered significant second-round effects, meaning higher energy prices have not fed into wages and broader price pressures. Inflation in the euro zone has already surpassed 3% and could reach 4% by year's end, roughly twice the ECB's 2% target.

Lagarde attributed the recent increase in inflation to surging oil and gas prices linked to the US-Iran conflict. The ECB is closely monitoring this shock but has not yet seen evidence of it spreading into wage growth.

The ECB chief indicated that a measured policy response remains appropriate as long as inflation expectations and wage pressures stay contained. Lagarde acknowledged that the risks to the inflation outlook are tilted to the upside, with uncertainty remaining elevated.