MADRID (Reuters) – Inflation in the euro zone could decline faster than initially expected given encouraging developments in recent months, European Central Bank member Pablo Hernandez de Cos said on Wednesday. ECB).
The pass-through of past price increases and tightness in the labor market could put upward pressure on core inflation in the near term, however, added the Governor of the Bank of Spain.
“Recent data on inflation in the euro zone and some of its main elements are somewhat encouraging, but the overall situation still calls for caution,” said Pablo Hernandez de Cos, according to statements published on the website of the Bank of Spain.
The ECB has raised its main policy rate by 300 basis points since July and some central bank officials are beginning to question whether rates will peak in a context of slowing inflation.
Pablo Hernandez de Cos believes, however, that the signs of an ebb of inflationary pressures require confirmation and that careful monitoring of their repercussions is necessary, particularly on basic prices, the labor market and wages.
The Governor of the Bank of Spain also notes that the reopening of the Chinese economy, the resilience of activity in the euro zone and the effects of ECB decisions could have an impact on inflation.
“All of these elements will need to be assessed as part of the full review of projections underway in the run-up to our March meeting,” he said.
(Report Jesús Aguado; Claude Chendjou, edited by Tangi Salaün)
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