Lagarde warns euro-area inflation will remain high into first half of 2027
The ECB president warned that higher energy costs and global uncertainty could keep inflation above target and weigh on growth.
European Central Bank President Christine Lagarde said inflation in the euro area will remain high through the first half of 2027, driven largely by rising energy costs, and warned that the Middle East conflict and uncertainty in global trade could slow economic growth.
Energy prices keep inflation elevated
"It is expected that higher energy prices will keep underlying inflation well above target in the first half of 2027 and gradually pass through to core inflation and food price inflation," Lagarde said.
Annual inflation in the euro area rose to 3.8 percent in September, mainly because of energy price increases, while core inflation edged up to 2.5 percent.
According to the ECB's expectations, inflation should start to decline gradually after the first quarter of 2027 as the contribution from energy products fades, approaching the two percent target by the end of that year.
Lagarde highlighted the risks to the outlook, noting that the conflict in the Middle East and continued uncertainty in international trade are important factors that could slow the recovery.
Photo: press material from the event
