ECB President Christine Lagarde has issued a stark warning that elevated energy costs are no longer just a headline statistic but are beginning to exert tangible pressure on the broader economy.
The central bank chief highlighted that the persistent spike in power and fuel prices is starting to filter through to consumer behavior and corporate margins, complicating the path toward price stability.
The warning comes as markets continue to grapple with the dual headwinds of geopolitical instability and stubborn inflation.
Investors are reassessing the timeline for rate cuts as the ECB balances the need to support growth against the risk of entrenching higher price levels.
The shift in tone suggests policymakers are increasingly concerned that energy-driven inflation is becoming more entrenched in the economic fabric.
This development arrives against a backdrop of intensifying conflict in Eastern Europe, which has kept energy supply routes vulnerable.