ECB Officials Say Middle East Energy Shock Has Not Yet Hit Euro Economy

European Central Bank (ECB) Governing Council member Olli Rehn stated that the energy-price shock from the Middle East conflict has not yet affected other parts of the economy. Speaking at an OMFIF event in London, he emphasized that energy prices remain the main driver of euro area inflation, while wage growth remains moderate.

Rehn noted that second-round effects or any price-wage spiral have been absent so far. The ECB raised borrowing costs last week for a second time since fighting in the Middle East began, as inflation remains well above the 2% target and the region's economy shows resilience to the Iran war.

Gabriel Makhlouf, Rehn's Irish counterpart, said that another rate increase next month cannot be ruled out if circumstances require it. He described each gathering as a 'live meeting' where officials take each decision on its own merits.