By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Primož Dolenc said Wednesday that higher energy prices had so far had only limited indirect effects on the broader economy, but warned that the Middle East conflict could still push up inflation expectations and consumer prices.

In remarks at the 43rd Financial Conference, Dolenc, who heads Banka Slovenije, said global and Eurozone growth appeared to be slowing as energy prices rose and uncertainty increased.

Eurozone growth had weakened particularly because of softer demand for services, Dolenc said.

Geopolitical tensions in the Middle East were likely to feed increasingly into consumer inflation expectations over time, he said.

Broader effects could also emerge later in the economy if higher energy and commodity prices on global markets were passed on to prices of goods and services in the coming months, he said.

The Governing Council currently saw inflation expectations as still contained, Dolenc said.

"The Governing Council notes that current inflation expectations are currently still under control, and higher energy prices have only limited indirect effects on the rest of the economy for the time being," he said.

Still, the ECB would keep a close eye on the Middle East and could revisit policy at future meetings, Dolenc said.

"However, we will closely monitor developments in the Middle East and, depending on the situation, reconsider our decision at future Council meetings," he said.