By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member José Luis Escrivá said on Thursday that recent swings in oil prices triggered by developments in the Middle East conflict were making it more difficult for policymakers to assess the appropriate path for interest rates.
Speaking in Tenerife, Spain, Escrivá, who heads the Banco de España, said that when oil prices had been trading at elevated levels, markets had expected them to remain well above pre-war levels over the following year, raising concerns about more persistent inflation.
Pointing to a chart of recent oil price movements, he noted how quickly the outlook had shifted. "Here you can see where we are now, and in fact you can even see how things have changed from yesterday to today," he said.
He noted that this volatility made “things very difficult for those of us who have to make decisions on interest rates in Europe, in the Governing Council of the ECB.”
Despite heightened geopolitical uncertainty and higher energy prices, Escrivá said the economy had "held up remarkably well" and shown "a great deal of resilience."
Economic growth had avoided any sharp slowdown, consumers had not significantly increased precautionary savings and companies had continued to invest, he said.
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