During its upcoming meeting in the Greek capital of Athens on Thursday, the European Central Bank (ECB) is anticipated to announce a suspension of interest rate hikes.
Read more: ECB raises interest rates to a record high
During a television statement in Athens, ECB President Christine Lagarde said, “We are particularly attentive,” with regard to risk control, including the potential rise in oil prices due to the Middle East conflict.
She added, “We have to look at our mission. What impact it will have and we monitor carefully any form of conflict. What impact it can have on our economies. Energy back in 2022 was a major driver of inflation and we know how much that has cost and how people have suffered because of high energy prices. ”
Still, some analysts say that an escalation could push oil to $100 a barrel. “We are particularly attentive as it is a region of the world where there is a lot of traffic of oil, where there are oil-producing countries and where there could be an impact, directly or indirectly, on the confidence channel, which also matters,” Lagarde said.
Lagarde reiterated that the ongoing struggle to control rising consumer prices is far from concluded, but she expressed confidence in the ability to restore inflation to a 2 percent level. She stated, “that’s our target and that’s the price-stability mission that we have.”
Regarding the actions undertaken by the Central Bank, Lagarde said that the focus remains on closely monitoring prices, wages, and profit margins to identify potential risks. However, she expressed optimism regarding the progress being made towards achieving a 2 percent inflation target.
The ECB raised its key interest rates by 25 basis points in September, taking the deposit rate to 4 percent and the refinancing rate to 4.50 percent, but signalled its 10th increase in a 14-month-long streak was likely to be its last for now.
Inflation in the eurozone has been on a downward trajectory, although September’s 4.3 percent reading was still double the ECB’s 2 percent target.
Lagarde further called upon governments to assist the central bank by gradually phasing out the support measures implemented during the peak of the energy crisis.
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