ECB's Cipollone Rules Out Stagflation, Forecasts Inflation to Drop to 2.8% by June

Piero Cipollone, a member of the European Central Bank’s Executive Board, pushed back firmly against stagflation fears on April 30, arguing that the euro area’s current economic picture looks nothing like the grim 1970s playbook some commentators have been reaching for.

Headline inflation in the euro area climbed to 3.0% in April, up from 2.6% in March. Cipollone attributed much of the spike to energy prices, which surged 10.9% year-on-year. Ongoing conflicts in the Middle East have kept oil and gas markets on edge, and those supply-side pressures are flowing directly into consumer price readings.

The ECB’s own projections suggest the spike is temporary. Inflation is forecast to moderate to around 2.8% by June, which would represent a partial retreat toward the central bank’s 2% medium-term target.

Cipollone described the inflation risks as “very balanced,” a phrase central bankers use when they want to signal that they see upside and downside pressures as roughly equal.

In the 1970s, inflation expectations became unmoored. Workers demanded higher wages to keep up with prices, businesses raised prices to cover higher labor costs, and the whole thing spiraled into a self-reinforcing doom loop.

Today, long-term inflation expectations in the euro area remain anchored near 2%. Cipollone pointed to resilience in the EU economy, noting in remarks from late 2025 that the bloc was performing “better than expected” and that inflation was “basically under control.”

At the April 30 meeting, the ECB Governing Council opted to keep interest rates unchanged. The central bank acknowledged that risks to inflation have intensified while growth remains vulnerable.

The 10.9% year-on-year increase in energy costs is doing most of the heavy lifting in the inflation data. If Middle East tensions ease and energy markets calm down, the path back toward 2% becomes much shorter. If growth weakens while inflation stays elevated, the stagflation narrative will return with a vengeance, and Cipollone’s reassurances will face a much tougher audience.