The European Central Bank (ECB) President Christine Lagarde has welcomed the news of a US-Iran ceasefire, stating it could help reopen the Strait of Hormuz. However, fellow policymaker Joachim Nagel cautioned that it would bring no immediate relief to high euro zone inflation.

Caution on Inflation Relief

Nagel, who heads Germany’s Bundesbank, noted that even if the Strait of Hormuz were to become navigable again soon, it would take months for the oil supply to return to normal. He argued that inflation in the euro zone would remain elevated even in the ECB’s ‘mild’ scenario, in which energy prices fall faster.

Lagarde also struck a cautious note, saying ‘the whole question of uranium enrichment remains to be debated, agreed and concluded in the form of an agreement.’ The ECB raised interest rates for the first time in nearly three years last week to try to curb inflation before the surge in energy costs that has followed unprecedented supply disruption linked to the Iran war spreads further across the euro zone economy.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.