By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Emmanuel Moulin said on Friday that higher energy prices were already feeding through to other goods and services despite the continued lack of evidence of knock-on effects on wages.

In a LinkedIn post, Moulin, who heads the Banque de France, said that “it is now clear that, whatever the short-term geopolitical developments, the energy shock will be persistent.”

“The increase in oil and gas prices has begun to pass through to other items in the consumer basket, notably to certain services prices, although we are not yet seeing second-round effects via wages,” he added.

Moulin noted that the ECB had revised its inflation projections higher in June, while the downgrade to economic growth forecasts had been more limited.

“We take inflationary pressures seriously and are determined to bring inflation back to our 2% target over the medium term,” he said.

He described Thursday’s 25bp rate hike as “necessary to ensure second-round effects remain contained,” adding that the ECB’s scenario analysis supported the decision.

“In a highly uncertain environment, we will remain attentive to incoming data and developments, without committing to a pre-determined path,” he said.

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