European Central Bank President: High energy prices are beginning to transmit to other sectors of the economy.

European Central Bank President Christine Lagarde said that the high energy prices are beginning to transmit to other sectors of the economy. In an interview on Monday, she said, "In recent weeks, we have clearly felt the indirect impact of inflation in almost every sector." Due to the pressure on prices caused by the situation in the Middle East, the European Central Bank raised interest rates last week, marking the first rate hike since 2023. Central bank officials do not rule out another rate hike as early as the July monetary policy meeting. Policymakers like German Bundesbank President Joachim Nagel believe that even if the Iran-related conflict ends soon, prices may remain high for a longer period of time. The increase in borrowing costs has raised concerns among some observers at the European Central Bank that the economy may be impacted. Lagarde said, "I have heard a lot of criticism, much of it from France, and I understand that. Some people think that rate hikes will smother economic growth. But once inflation picks up, I must contain it. Because once inflation gets out of control, the difficulty and cost of reining it in will increase significantly. Long-term high inflation is unbearable for consumers and businesses, and I would also be derelict in my duty." Hours before these remarks were made, the United States and Iran announced a temporary agreement to reopen the Strait of Hormuz.