Iran war presents risk to euro zone growth and inflation outlook, Lagarde says

ECB President Christine Lagarde warned that the Iran war could slow euro zone growth and lift inflation above already raised projections, reinforcing a higher-for-longer vigilance bias at the ECB. The comments point to an added upside risk to prices and downside risk to activity, which could keep monetary policy tighter for longer. The issue is market-wide because it affects growth, inflation expectations, and ECB policy odds across Europe.

Analysis

ECB President Christine Lagarde warned that the Iran war could slow euro zone growth and lift inflation above already raised projections, reinforcing a higher-for-longer vigilance bias at the ECB. The comments point to an added upside risk to prices and downside risk to activity, which could keep monetary policy tighter for longer. The issue is market-wide because it affects growth, inflation expectations, and ECB policy odds across Europe.