European Central Bank President Christine Lagarde said today that the framework agreement between the United States and Iran to end the war is certainly good news, but that caution should be exercised due to its economic impact.
She explained to state-run Radio France that the ECB raised interest rates last week for the first time in almost three years to curb inflation in the euro zone, caused by a surge in fuel prices since the start of the US-Israeli war against Iran, which disrupted the world's oil supply.
Eurozone inflation was 3,2 percent in May, driven by rising fuel and service prices, and is now well above the ECB's two percent target.
"I have to destroy inflation if it wakes up, because if it 'escapes from the bottle' it will be much harder to put it back in, much more expensive," she said.
Lagarde said the euro zone was starting to "feel the second-hand effects of inflation," which, she said, meant risks, especially from wage increases.
Christine Lagarde underlined that Washington and Tehran have yet to discuss a number of points that will be crucial to achieving lasting peace, especially the issue of Iran's nuclear program.
U.S. and Iranian officials said Sunday they had agreed on a framework to end the war and reopen the Strait of Hormuz, vital to the world's oil supply, whose blockade has fueled skyrocketing inflation since the war began in late February. The signing is expected on Friday in Geneva.
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