BRUSSELS, June 22 (Xinhua) -- The euro area economic outlook remains uncertain, with inflation facing upside risks and economic growth tilted to the downside, despite a recent peace agreement in the Middle East, European Central Bank (ECB) President Christine Lagarde warned on Monday.
Speaking at a hearing of the European Parliament's Committee on Economic and Monetary Affairs in Brussels, Lagarde said the Middle East conflict has already pushed up energy prices, lifted inflation and weighed on economic activity in the euro area.
"The outlook remains uncertain, with upside risks for inflation and downside risks for economic growth," Lagarde said.
She welcomed the peace agreement in the Middle East, but cautioned that the situation remains fragile, with risks of setbacks or renewed escalation.
The full implications of the war for medium-term inflation and growth, she said, will depend on the intensity and duration of the energy price shock, as well as the scale of its indirect and second-round effects.
Euro area inflation rose to 3.2 percent in May from 3.0 percent in April, driven mainly by higher energy inflation, which exceeded 10 percent in both April and May.
Meanwhile, inflation excluding energy and food also increased to 2.6 percent in May, partly reflecting the initial indirect effects of higher energy prices.
