Lagarde: Inflation Risks Tilt to the Upside

According to Jin10, ECB President Christine Lagarde said the risks to the inflation outlook are tilted to the upside. Energy shocks could intensify further, and their impact on other prices and wages may be more significant than currently expected. The longer energy prices stay elevated, the more likely they are to push up overall inflation through indirect and second-round effects. Extreme weather events, such as persistent heat waves and broader climate and nature crises, may make food prices rise more than expected. By contrast, inflation could fall if the conflict in the Middle East is resolved sustainably or if indirect or second-round effects are less pronounced than expected.