By Marta Vilar – BRUSSELS (Econostream) – European Central Bank Vice President Luis de Guindos said on Thursday that the baseline scenario assumes the Iran conflict will be short-lived, adding however that the uncertainty was “huge.”

In a panel discussion at the IIF European Summit in Brussels, de Guindos said the economic outlook would be shaped by developments in the Middle East.

Before the conflict began, the European economy had proved more "resilient" than expected, which he said was “something important to bear in mind.”

Risks to the outlook had been “two-sided” and “balanced,” while the evolution of inflation had been “positive” for both headline and core measures. The ECB had been in a “good place in terms of inflation,” he added.

Interest rates were at an appropriate level and the ECB’s meeting-by-meeting, data-dependent approach remained appropriate, though uncertainty was now “huge,” he said.

Given this uncertainty, de Guindos noted that the ECB would need to adopt a “different approach” in discussing the outlook and develop “a couple of potential scenarios.”

“The first one is the baseline, that this is going to be short-lived, and the other one is that is going to be longer,” he said.

Financial markets had so far evolved in an “orderly” way, he added, noting that the US dollar had appreciated, sovereign bond yields had risen slightly and US equities had outperformed European stocks.