Energy Shock Could Prolong Inflation: ECB Assesses Wider Impact

Bulgaria's Central Bank Governor Dimitar Radev warns that an energy shock could prolong inflation, which remains above the European Central Bank (ECB) target. The energy crisis is affecting the economy, and its impact may be more severe than initially expected.

Radev believes that the ECB will assess whether higher energy costs are concentrated in the energy sector or begin to exert broader pressure on prices, wages, and inflation expectations.

The bank's governor also stated that there are no signs of widespread second-round effects from the energy shock. However, he emphasized that vigilance is necessary due to the ongoing crisis.