ECB's Moulin says that inflation is clearly 100% energy and does not see second round effects; geopolitical shock is transmitting into financial shock

• Economic growth in the Euro area has been quite resilient

The framing here is the classic supply-shock doctrine: treating an energy-driven inflation spike as a relative price shift rather than a broad price-setting problem, with the absence of second-round effects in wages and core prices cited as the reason policy need not lean hard against the headline rate. Officials making this argument have historically used it to justify looking through an elevated print, and the division that matters is whether that view holds at the median of the Governing Council or sits with one wing, since it is the centre that determines whether the reaction function stays on hold through a supply shock or tightens to defend credibility. The more unusual element is the explicit warning that a geopolitical shock is transmitting into a financial shock, which shifts the transmission channel from inflation to conditions: wider sovereign and credit spreads, tighter bank funding, and the collateral stress that has on past occasions pushed the ECB toward liquidity operations or flexibility in asset purchases rather than rate action. In episodes of this kind, the central bank's history is to separate the two problems, keeping rates tied to the second-round-effects question while deploying balance-sheet or backstop tools against fragmentation and financial stress. The follow-ons worth tracking are wage settlements and negotiated pay data as the test of the no-second-round claim, peripheral spreads against the core as the gauge of the financial transmission being described, and whether other officials echo or push back on both halves of the message. As commentary rather than a decision, the signal is dovish on rates but flags elevated sensitivity to market-functioning risk.