ECB officials signal caution on inflation expectations amid energy price volatility but see no significant second-round effects yet.
European Central Bank officials are closely watching the impact of energy price shocks and Middle East uncertainty on Eurozone inflation, though they report no major second-round effects from wages or corporate pricing. The ECB maintains a data-dependent stance, keeping rate options open amid elevated risks to inflation expectations.
Recent comments from ECB policymakers Piero Cipollone and Martin Kocher highlight concerns over direct and indirect energy price passthrough but note limited wage or pricing behavior spillovers. Bundesbank President Joachim Nagel emphasized vigilance, reinforcing the ECB’s focus on anchoring inflation expectations.
Euro area industrial production declined 0.2% month-on-month and 1.2% year-on-year in May, underscoring economic fragility alongside inflation concerns.