Luis de Guindos, Vice President of the European Central Bank, expressed concerns about the potential impact of the situation in the Middle East on inflation. He noted that the ECB is facing challenges in achieving its inflation target and mentioned the risks associated with geopolitical tensions in the region. The deputy governor pointed out that the central bank’s efforts to suppress demand may not be as effective as desired, which could slow down inflation.
In an interview, de Guindos emphasized that factors such as increasing company profits and upward pressure on wages in the euro area could contribute to inflation. He also highlighted global economic conditions as a dampening factor on inflation. Despite expectations that it will return to the ECB’s target of two percent next year, de Guindos acknowledged that inflation remains uncertain due to various factors and risks influencing it.
The VP of ECB further stated that they will need to closely monitor these developments and adjust their policies accordingly to achieve its inflation target. This includes keeping a close eye on geopolitical tensions in the Middle East, company profits, wage pressures, and global economic conditions.
