ECB’s Panetta Highlights Fragile Eurozone Outlook Amid Dual Inflation and Growth Risks, Citing Geopolitical Energy Concerns

• ECB’s Panetta warns of fragile Eurozone outlook.
• Upside inflation risks coexist with downside growth risks.
• Geopolitical energy concerns, like Strait of Hormuz, contribute to inflation.
• Euro muted despite hawkish comments.

European Central Bank (ECB) Governing Council member Fabio Panetta stated on Tuesday that the Eurozone economy faces a fragile outlook, characterized by coexisting upside inflation risks and downside growth risks. Panetta emphasized that the latest energy shock should not be dismissed as temporary, noting that supply shocks are becoming more frequent. He specifically cited the uncertain governance of the Strait of Hormuz, a critical chokepoint for approximately 20% of global energy supply, as a factor contributing to persistent inflation risks. Despite these remarks, which carried a slightly hawkish undertone, the Euro remained largely muted, with EUR/USD trading 0.12% lower at the time of reporting.