By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Martin Kocher said on Tuesday that he does not expect the Middle East conflict to push the euro area into recession.
Responding to questions from reporters today in Vienna, Kocher, who heads the Austrian National Bank, said that energy prices remain “far below the peak levels of 2022.”
While he said he could not place “full trust” in US President Donald Trump’s comment that the war could end soon, Kocher added that the situation could nevertheless ease again “relatively quickly.”
He stressed that policymakers must proceed cautiously and carefully consider how to respond.
Some consequences of the conflict — including infrastructure disruptions and supply bottlenecks — could have longer-lasting effects, he said. “[E]ven if the war really ends quickly, there are a few effects that will stretch over several months.”
According to Kocher, market pricing currently suggested the war could end within weeks or, at most, months. The Austrian central bank’s baseline scenario assumed an average oil price of €85 and gas at €55 in 2026, he said.
Asked about the risk of recession linked to the conflict, Kocher said such scenarios could be imagined but that it was “very premature” to declare one.
“I see no recession for Austria or the Eurozone at the moment,” he said, noting that the current conflict is “completely different” from the oil shock of the 1980s and that “one should be very careful with this word.”
He said that the ECB is “very, very well prepared,” highlighting the “great value” of maintaining policy optionality and the need for the central bank to be able to “react quickly.”
“I am convinced that together next week we will find a good decision in view of the challenges that lie before us,” he said.
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