© Reuters. FILE PHOTO: European Central Bank (ECB) Vice-President Luis de Guindos attends a news conference following the ECB’s monetary policy meeting in Frankfurt, Germany December 15, 2022. REUTERS/Wolfgang Rattay/File Photo
MADRID (Reuters) -Inflation is expected to stay on its downward trend in the coming months, the European Central Bank’s Vice-President Luis de Guindos said on Monday, but he urged caution due to uncertainty over oil price moves in the wake of events in the Middle East.
“The macroeconomic environment is subject to enormous uncertainty… Nobody knows what is going to happen in the future (…) especially after what happened this weekend,” De Guindos told a financial event.
The commodity-heavy FTSE 100 rose on Monday as oil prices jumped more than 2% amid fighting between Israeli and Hamas forces in Gaza.
Though De Guindos expected both headline and core inflation to decline, he noted that the pace of price rises was still clearly above the bank’s 2% goal.
He therefore called for caution “mainly because of the evolution of oil prices, the depreciation of the euro and the evolution of unit labour costs”.
The ECB raised borrowing costs to record highs in September to rein in prices in the euro area, which are still rising at more than twice its target pace after the bloc was hit by higher energy prices and supply snags in 2022.