By Marta Vilar – SORIA, Spain (Econostream) – European Central Bank Vice President Luis de Guindos said on Friday that there were no signs of a wage-price spiral yet stemming from the increase in energy prices due to the Middle East conflict, adding that inflation expectations were so far “relatively contained.”

In a speech at the Cámara de Comercio in Soria, de Guindos said that the current shock was stagflationary as it generated an increase in prices while it lowered economic growth.

“The intensity of this negative impact will depend on the evolution of the conflict,” he said. “The longer the conflict lasts, the more uncertainty it generates, the more widespread it becomes, the worse the shock will be.”

He said that the increase in oil prices had already generated inflationary pressures, as seen in data already available.

“If at some point inflation expectations rise, that could trigger an inflationary spiral,” he said. “That is what would concern us, and it has not happened yet. Inflation expectations are relatively contained and anchored around our definition of price stability.”

The ECB would proceed “meeting by meeting,” and will await further information about the conflict, he said.

“The conflict changes from one day to the next. Two days ago we had a tremendous threat that attacks could escalate, and then we had a ceasefire,” he said. “Let’s see what happens—there seem to be doubts about it, but there also appears to be a possibility of dialogue between Iran and the United States.”