ECB President Christine Lagarde said euro zone inflation could approach 4% by year-end, driven mainly by higher oil and gas prices linked to the US-Iran conflict, but has not yet produced dangerous second-round effects in wages or broader prices. Inflation has already exceeded 3%, while Spain’s harmonized inflation reached 5% in September, prompting markets to price as many as four additional ECB rate hikes over the next year after two summer increases. Germany’s 10-year Bund yield stabilized above 3.6%, near its highest level since June 2009, as investors assessed Lagarde’s cautious policy signal, flash inflation data and elevated oil prices. Lagarde said a measured response remained appropriate despite higher inflation risks and elevated uncertainty. Economists broadly expect the ECB to leave rates unchanged at its October 29 meeting before potentially resuming tightening in December, when new projections are due. She also said manufacturing was performing solidly, the labour market remained robust and investment should support growth.