By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Emmanuel Moulin said on Wednesday that the impact of renewed tensions in the Middle East on inflation would depend on how persistent and long-lasting the latest crisis proved to be.

In an interview with French TV France 5, Moulin, who heads the Banque de France, said that any renewed rise in inflation would depend “on what happens next: whether this new crisis is long-lasting, whether it persists, or whether the Americans reach an agreement with the Iranians.”

Given the high level of volatility, policymakers had to be prepared "for all eventualities," he said.

He agreed that a further pickup in inflation should not be ruled out.

Turning to the French economy, Moulin said the main cost of the conflict would be weaker-than-expected growth, noting that the French government had initially forecast GDP growth of 0.9%.

Regarding the Banque de France's more downbeat growth outlook, Moulin said, "[p]erhaps we were a bit pessimistic because the second quarter is looking a little better than we had anticipated."

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