(Bloomberg) -- European Central Bank President Christine Lagarde said the battle to tame consumer-price gains isn't over, but she has confidence they can be returned to 2%.
“We are not done yet,” Lagarde told Greece's Antenna TV in comments aired Wednesday. “And we need to really bring inflation back to 2% in the medium term because that's our target and that's the price-stability mission that we have.”
Lagarde said officials, who are meeting in Athens and are expected to announce a pause in interest-rate increases on Thursday, must be “very attentive” in monitoring risks — including a potential upswing in oil prices due to the conflict in the Middle East.
“We need to look at prices and wages and profit units and all that to to see where the risks are,” she said. “But for the moment, I'm confident that we are on a journey to bring inflation back to 2%.”
Speaking separately on ERT TV in remarks aired earlier in the day, Lagarde said the ECB is watching the oil price for any inflationary impact from the Israel-Hamas conflict.
“What impact it will have and we monitor carefully any form of conflict,” she said. “What impact it can have on our economies. Energy back in 2022 was a major driver of inflation and we know how much that has cost and how people have suffered because of high energy prices.”
Lagarde's comments echo previous remarks. Crude spiked in the initial stages of the Hamas-Israel war on concerns the conflict would escalate, potentially threatening exports from Iran and risking attacks on tankers in key shipping routes. Those fears have ebbed in recent sessions, with growing calls within Israel to rethink the scope of a ground invasion of Gaza.
Still, some analysts say that an escalation could push oil to $100 a barrel. The ECB's September inflation forecast — which predicts consumer-price growth will slow to 2% in 2025 — is based on an estimate of an oil price of $82.7 per barrel this year dropping to $77.9 in 2025.
“We are particularly attentive as it is a region of the world where there is a lot of traffic of oil, where there are oil-producing countries and where there could be an impact, directly or indirectly, on the confidence channel, which also matters,” Lagarde told ERT TV.
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