ECB President Christine Lagarde told reporters that long‑term inflation expectations remain broadly anchored to the 2% target despite the escalating fallout from the Iran‑related conflict. She said the central bank’s latest surveys show households and firms still expect price growth to converge to that level over the medium term, easing concerns about a wage‑price spiral.

Analysts interpret Lagarde’s comment as a signal that monetary policy can stay on its current path without immediate rate hikes. Bond markets have already priced in a stable outlook, keeping yields near historic lows. However, the Iran war’s impact on energy supplies could revive headline inflation, prompting investors to watch ECB minutes for any shift in tone.

Keeping inflation expectations anchored helps the eurozone avoid a credibility loss that could force tighter financing conditions for businesses. Companies counting on predictable borrowing costs may proceed with expansion plans, while consumers benefit from steadier price signals. Lagarde’s reassurance thus underpins current market stability, but any deviation in expectations would quickly reverberate through credit spreads and equity valuations.

Investors will also monitor fiscal authorities in member states, as coordinated fiscal‑monetary discipline can reinforce the ECB’s stance. Any surge in government spending that fuels demand may test the durability of the anchored expectations. For now, markets credit Lagarde’s assessment, keeping euro‑denominated assets attractive relative to peers.