ECB President Lagarde Says Energy-Driven Inflation Has Yet to Feed Into the Broader Economy
Updated
Summary
European Central Bank President Christine Lagarde said elevated euro-area inflation driven by high energy prices had not yet fed into the broader economy.
She said policymakers were monitoring indirect effects and potential second-round inflationary pressures, and urged caution despite no clear signs of those effects emerging so far.
Why it matters
Euro-area inflation continued to exceed forecasts, while markets were pricing in another ECB rate hike in December.
The euro was little changed at $1.12 after recovering from its weakest level in a year and a half. The report also described the currency as under pressure from surging energy prices, persistent inflation, rising borrowing costs and fiscal concerns in highly indebted countries, particularly France.
The report said the US-Iran conflict showed little sign of easing.
What remains uncertain
Investors were awaiting US inflation data for fresh clues on the Federal Reserve’s rate path.