ECB’s Herodotou: Escalation of Conflicts Could Threaten Price Stability

4 December 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Constantinos Herodotou on Sunday said that an increase in the violence in Ukraine and the Middle East could boost euro area inflation.

In an interview with the weekly Cypriot edition of Greek newspaper Kathimerini, Herodotou, who heads the Central Bank of Cyprus, said, ‘‘Economically, the impact of the conflicts on the European economy is currently limited.’

‘However, a possible escalation of the conflicts in both Ukraine and the Middle East could affect the recovery path of the Eurozone and lead inflation to higher-than-forecast levels with a consequent slowdown in its correction path’, he added.

Weak economic growth in Europe this year was no surprise, he said, emphasising that a hard landing had nonetheless been skirted.

Growth would recover in the next years, on the assumption that the ECB would restore price stability. This implied that ‘the contribution of the ECB's monetary policy to the creation of sustainable economic growth is decisive’, he said.