Nagel Warns Euro Zone Inflation May Stay Above 2% as U.S.-Iran War Energy Shock Lingers
Updated
Updated · CNBC · Jun 30
Nagel Warns Euro Zone Inflation May Stay Above 2% as U.S.-Iran War Energy Shock Lingers
3 articles · Updated · CNBC · Jun 30
Summary
Joachim Nagel said inflation is likely to remain significantly above the ECB’s 2% target even after Washington and Tehran agreed to end their war.
The Bundesbank chief said the energy price shock is still feeding through the economy, while the Middle East situation remains too opaque to judge the path of monetary policy.
Euro zone inflation was estimated at 3.2% in May, driven by double-digit energy price growth after the war and the Strait of Hormuz blockade disrupted a critical oil route.
The ECB raised rates earlier this month for the first time since 2023, and markets now price in another increase in September, according to LSEG data.
At the Sintra forum, Christine Lagarde said the ECB can return to policy rates as its main tool, but warned geopolitics and supply-side shocks are making inflation management harder.