By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Emmanuel Moulin said Thursday that higher energy prices had not so far developed into broader inflationary pressure, with only limited indirect effects and no evidence of second-round effects.

Speaking at the Istanbul Economic Forum, the Banque de France governor said the rise in inflation was being driven by energy.

“It’s clearly 100% energy,” Moulin said. “We see very little indirect effect. We see very small impact at this stage, and we don’t see second-round effects.”

Moulin said the euro area economy had meanwhile continued to show resilience despite the inflation shock.

He also said the consequences of geopolitical tensions were increasingly visible in financial markets, particularly through higher longer-term borrowing costs.

“What we see is that this geopolitical shock is also transmitting into a financial shock, and this is, I think, an important point to keep in mind,” Moulin said.

“Financial conditions have been impacted by the increase in interest rates,” he said.

Moulin said oil price movements had coincided with increases in long-term yields in both the United States and Europe.

“We see that there is a strong correlation between oil, long-term interest rates in the US, and interest rates in Europe,” he said.

He said the rise in yields was not restricted to countries with weaker fiscal positions.

“This increase in interest rates affects all countries, whatever is their fiscal position. Actually some countries with very strong fiscal positions are affected, as countries with weaker fiscal positions,” Moulin said.

Moulin said euro area growth had so far remained relatively resilient despite the energy and geopolitical shocks.