ECB’s de Guindos: Inflation Could Last Longer Than Expected

Reiterating the ECB’s well-known stance on inflation, ECB’s de Guindos said that the current phase of higher inflation, which partly reflects an increase in energy prices and supply constraints, could last longer than expected only some months ago.

Supply shortages may dampen activity while pushing up prices, adding to the uncertainty in the outlook for growth and inflation, de Guindos added.

Rising energy costs are weighing on growth by limiting the purchasing power of households. To prevent the materialization of the medium-term risks that we have identified, he added, it is essential to maintain the momentum of the recovery and avoid scenarios that could put our price stability objective in jeopardy. To do this, the bank must continue to ensure favourable financing conditions.

De Guindos’ comments on inflation are not new, but his remarks could impact the EUR/USD pair that has been gradually ebbing lower in recent trade sessions and recently broke out to fresh year-to-date lows around 1.1420.