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Lagarde says Middle East energy crisis is ECB priority threat

ECB President Christine Lagarde said the energy shock is weighing on both prices and growth, and rising raw-material costs can hurt economic activity.

Reported · Written up by our desk · Central Banks

In an interview with ECB President Christine Lagarde, she said the world is facing interconnected crises rather than events that unfold one after another. Lagarde argued that supply disruptions tied to the pandemic, followed by Russia's invasion of Ukraine, helped drive an energy crisis and an inflation surge.

Lagarde said the ECB’s priority remains price stability, but identified the energy crisis linked to the conflict in the Middle East as the main threat. She added that the energy situation is weighing on prices and also on growth.

She also pointed to a channel she said is often overlooked, noting that when the cost of raw materials rises, the effect on economic activity is frequently underestimated. Lagarde linked the energy pressures to a broader geopolitical situation that is evolving alongside the conflict.

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