By Marta Vilar – WASHINGTON (Econostream) – European Central Bank Governing Council member Madis Müller said on Thursday that, given the data available by the April 30 meeting, it may be difficult to determine whether the ECB should be worry about possible ramifications of the energy shock.

Müller, who heads Eesti Pank, told Reuters that “[a]t this point there is no hard data on that yet,” referring to evidence of the second-round effects from the Middle East conflict.

“It would also take some time for broader inflationary pressures to take hold,” he said, adding that it could “be difficult” to know by April 30 whether the ECB should be concerned about it.

He said a rate hike in April was not out of the question, adding that the ECB had to keep its options open as unexpected changes in the evolution of the war had the potential to significantly change the outlook.

“For example, something could go terribly wrong with the peace negotiations,” he said. “The duration of the war is the biggest unknown that will drive energy prices and will have broader implications for growth and inflation.”

He warned that it would be an error for the ECB to treat the inflation shock as merely temporary or short-lived.

There would be “a lot more information” by the time the ECB meets in June, he said.

“We'll have additional inflation figures, more hard data, new projections, and better ​indication for the development of inflation expectations,” he said.

 

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