Frankfurt, Sept. 13 (SANA)European Central Bank President Christine Lagarde said eurozone inflation is likely to remain elevated for longer than previously expected as higher energy prices linked toMiddle Easttensions continue to pressure markets.

“The current shock is longer-lasting,” Lagarde told French newspaper Ouest-France in an interview published on Saturday, adding that continued instability in the region could keep energy markets volatile and prices elevated while higher costs threaten economic growth.

The ECB has said inflation is set to remain above its 2% target for an extended period, with new projections showing headline inflation averaging 3% in 2026, 2.5% in 2027 and 2.1% in 2028.

The ECB raised its three key interest rates by 25 basis points this week, taking the deposit facility rate to 2.5%, as the central bank responded to continuedinflation pressures.

The move marked the second rate increase this year amid higher energy prices and comes as eurozone inflation remains above the ECB’s medium-term target.

Lagarde said the Middle East conflict and disruptions affecting refining capacity were among factors contributing to higher energy costs. She added that the resilience of the eurozone economy required policymakers to respond to inflationary pressures.

The ECB said its monetary policy decisions would continue to depend on incoming economic and financial data, inflation developments and the strength of policy transmission.

New ECB projections also showed a more resilient economic outlook despite inflation pressures.

The central bank expectseurozone economicgrowth of 0.9% in 2026 and 1.4% in 2027, compared with earlier projections of 0.8% and 1.2%, respectively.

The ECB attributed the upward revision partly to stronger-than-expected resilience in the euro area economy, while warning that the outlook remains uncertain, with risks to inflation and growth.

Bundesbank President Joachim Nagel said on Friday that borrowing costs may need to move into mildly restrictive territory to bring inflation under control.

Lagarde also addressed risks linked to elevated valuations in the artificial intelligence sector, citing concerns over companies investing in one another and awarding contracts for products such as semiconductors.

She called for planned structural reforms inFranceto be implemented and reiterated her opposition to proposals to cancel government debt held by central banks, describing such a move as financially dangerous.

Lagarde also played down the possibility of running in France’s presidential election and reiterated that she plans to leave the ECB next year, without saying whether she would complete her term through October 2027.