Lagarde says ECB may adjust policy if Iran war energy shock pushes inflation higher

Why is Lagarde talking about possible rate changes now?

Because the Iran war has pushed up energy prices, and the ECB is assessing whether that shock could feed into broader inflation. Lagarde said the bank may need to respond if the rise in prices becomes large enough or lasts long enough to threaten the 2% target Reuters Bloomberg Business.

Did Lagarde say the ECB will raise rates immediately?

No. She said the ECB will not act until it has enough information about the shock’s size, persistence and spread, even though it is prepared to move if needed Bloomberg Business Il Sole 24 ORE europa press.

What did Lagarde mean about firms and workers reacting faster than before?

She said the inflation surge after Russia’s invasion of Ukraine left a recent memory of high prices, which could make businesses pass on higher costs more quickly and workers seek compensation sooner if energy prices keep rising Daily Mail U.S. News & World R….