European Central Bank President Christine Lagarde has warned that eurozone inflation will stay elevated longer than expected, citing persistent energy market volatility linked to the Middle East conflict.

“The current shock is longer-lasting,” Lagarde said in an interview with Ouest-France. Euro area inflation rose to 3.2 percent in August from 2.9 percent in July, as energy inflation climbed to 14.3 percent.

The ECB raised its three key interest rates by 25 basis points at its September 10 meeting, taking the deposit rate to 2.50 percent. It was the second hike after June’s increase, following a decision to hold in July.

The bank’s latest projections see headline inflation averaging 3.0 percent in 2026, easing to 2.5 percent in 2027 and 2.1 percent in 2028, all above the 2 percent target. Growth forecasts were nudged up to 0.9 percent for 2026.

Lagarde stressed the ECB remains data-dependent and is not committing to a preset rate path. Officials see no material pass-through of the energy shock into wages so far.