Lagarde: War creates "double uncertainty", ECB needs more data before setting rate path

European Central Bank President Christine Lagarde said the U.S.-Iran war has introduced a "double uncertainty" for eurozone monetary policy, leaving the economy caught between the ECB's baseline and adverse scenarios and keeping policymakers from committing to a clear interest-rate path with nine days to go until the April 29–30 meeting. Lagarde described the tension as structural: war-driven energy costs can push inflation above target, while a softer growth outlook pulls in the opposite direction. Core inflation remains sticky at 2.9%. Negotiated wage growth in Q1 2026 held at 4.5%, and headline HICP rose to 2.6% in March. Under the ECB's March baseline, inflation is seen at 2.6% this year before easing toward 2% in 2027. In the adverse scenario, oil is projected near $119 a barrel and inflation moves above 4%. Markets are pricing the ECB to hold rates at the April meeting, followed by a hike by June, taking the key policy rate to at least 2.5% by year-end. Speaking to Bloomberg TV last week, Lagarde said the ECB would stay data-dependent and agile, adding: "Any of the colleagues who are confident that it's going to be one way or the other don't know, honestly."