ECB President Lagarde said higher energy prices are starting to feed through to
other parts of the economy, with indirect inflation effects visible across
nearly all areas in recent weeks. The ECB last week delivered its first rate
increase since 2023 after the Middle East conflict amplified price pressures;
officials have not ruled out an immediate follow-up hike at the July meeting,
with Bundesbank chief Nagel among those warning prices could remain elevated
even if fighting involving Iran ends quickly. Lagarde acknowledged
criticism—often from France—that tighter policy may curb growth, but said she
must rein in inflation if it is reawakened because it would be harder and
costlier to control later; prolonged inflation would be unacceptable for
consumers and firms and a failure to meet her mandate.
