ECB President Lagarde (Q&A): not seeing second round effects. However, if the shock continues and the energy shock is longer than expected, we will see such effects and it will impact on food inflation.

Historically the operative part is the conditionality, since tying pass-through to the persistence of the shock and to food inflation effectively converts energy duration into a policy variable, and it is that conversion, not the denial, that the curve has tended to trade. The distinction worth drawing is between headline persistence and core or wage dynamics: a bank that concedes second-round risk conditional on food inflation is signalling it watches the channels through which energy feeds negotiated wages and services, which is where hawkish repricing in past supply-shock episodes has concentrated, typically at the belly of the EGB curve and in inflation swaps rather than at the front alone. Lagarde's prior form through the recent tightening and pause cycle has been to flag risks conditionally before the Governing Council moves, so remarks of this type have tended to prefigure the tone of subsequent decisions rather than contradict them. Worth watching is whether other Council members echo the same conditional language and how the next wage-negotiation and negotiated-wage data sit against it, since agreement among officials on the trigger has historically been the tell that the condition is being taken seriously.