European Central Bank President Christine Lagarde has dismissed fears of stagflation in the eurozone, even as rising energy prices push inflation higher.
Headline inflation in April 2026 reached 3.0%, up from 2.6% in March, driven by a 10.9% year-on-year surge in energy costs linked to the Middle East conflict. Despite these pressures, the ECB maintains its 0.9% GDP growth projection.
Lagarde’s confident stance suggests the central bank believes it can navigate the current economic challenges without aggressive rate cuts. Markets currently price a 100% probability of a 50+ basis point decrease, but her comments may challenge that assumption.