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Central Banker Warns of Lingering High Energy Costs
1 May
Summary
- ECB's Makhlouf concerned about prolonged high energy prices.
- He will monitor indirect effects on production and services.
- Wage-price spiral risks need careful monitoring.
European Central Bank Governing Council member Gabriel Makhlouf has voiced concerns that energy prices may remain elevated for an extended period. This situation is exacerbated by the lack of a clear resolution to Middle East conflicts. Makhlouf stated he will be vigilantly observing the indirect consequences of higher energy costs.
These indirect effects, known as cost-push inflation, can impact various sectors including production, transportation, and services. Makhlouf noted that potential second-round effects, such as wage increases feeding further inflation, are expected to manifest over a longer timeframe. This is attributed to the staggered nature of wage negotiations across Europe.
In light of these inflationary pressures, Makhlouf emphasized the critical importance of closely monitoring inflation expectations. The goal is to detect any signs that these expectations might become "de-anchored," meaning they start to rise persistently and independently of actual inflation trends.
