DUBLIN (EFE).— The chief economist of the European Central Bank (ECB), Philip Lane, warned that a prolonged conflict in Middle East and a sustained drop in oil and gas supplies could lead to a spike in inflation and a marked slowdown in inflation. production in the Eurozone.
In an interview with the British newspaper Financial Timespublished this Tuesday, Lane pointed out that the increase in energy prices impacts “especially in the short term” on consumer prices and would have adverse effects on economic growth forecasts. He stated that “the scope and duration of the conflict” They will determine the magnitude of the shock, which could be amplified “if it also caused a revaluation of risk in financial markets.”
The Irish economist indicated that the BCE maintains close monitoring of events. He recalled that in 2023 the institution prepared an analysis that contemplated the possible interruption of up to a third of the oil and gas that transits through the Strait of Hormuz, a strategic passage through which around 20% of the world’s crude oil circulates.
According to him Financial Times, Investors assign a probability of 88% to the ECB keeping the reference interest rate unchanged at 2%. In that sense, Lane stated that he sees no reason to modify the current position. “I think where we are now is good,” he declared.
Before the recent attack by the United States and Israel against Iran, the ECB projected that inflation would be slightly below the 2% target in the second quarter of the year and until the end of 2027, with a return to that target in 2028.
Lane stressed that the economics of eurozone grows “close to its potential” and ruled out risks of overheatingunless an intense and prolonged disturbance occurs. “In 2023 and 2024, growth was below potential. There is still available capacity, especially in manufacturing,” he said.
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