By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Olaf Sleijpen said on Thursday that the ongoing Middle East conflict is already taking a noticeable toll on the global economy and warned that a prolonged period of elevated oil prices could generate second-round effects.
In a speech at the Pension Seminar organized by De Nederlandsche Bank, which he heads, Sleijpen said that “it is now clear that the global economy is also taking significant hits” as a result of the war, now in its second month.
“The longer the war lasts, and the longer the production and supply of oil and gas remain disrupted, the greater the impact on growth and inflation will naturally be,” he said.
Sleijpen warned that persistently high oil prices could feed through not only to broader goods prices but also into wage formation, potentially amplifying inflationary pressures.
“In that case, the ECB will naturally intervene to keep inflation around 2% in the medium term,” he said.
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