ECB: highly uncertain outlook, risks to inflation and growth

With war in the Middle East, prices are set to remain high for some time

(Il Sole 24 Ore Radiocor) - ‘The outlook remains highly uncertain, with upside risks to inflation and downside risks to economic growth’. The ECB states this in its Economic Bulletin, emphasising that “with regard to the energy shock, the new scenarios drawn up by experts illustrate the wide variety of trends that growth and inflation would follow as assumptions about the intensity and duration of the shock vary,

‘as well as its indirect and second-round effects’. The conflict in the Middle East, the Eurotower notes, ‘continues to put pressure on inflation, which is expected to remain at levels significantly above the target for an extended period’.

In this context, the decision to raise interest rates on 10 September ‘reflects the Governing Council’s commitment to setting monetary policy in such a way as to ensure that inflation stabilises at the 2 per cent target in the medium term’ and “maintains a favourable stance, enabling it to address the uncertainty caused by the conflict”. The ECB confirms its “data-driven” approach to monetary policy decisions and “does not intend to commit itself to a particular path for interest rates”.

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