Makhlouf Warns High Inflation May Persist Amid Middle East Conflict

European Central Bank policymaker Gabriel Makhlouf has warned that an extended conflict in the Middle East could sustain high inflation for a prolonged period. According to Reuters, Makhlouf noted that uncertainty surrounding the outlook remains considerable and identified energy as the main near-term factor behind elevated inflation.

Makhlouf also pointed out that increasing interest rates much further from current levels could impose real costs on economic growth. The ECB raised borrowing costs for the second time this year, and sources told Reuters that policymakers anticipate additional tightening in the coming months, with a possible move as soon as October.