ECB’s Wunsch Wouldn’t ‘Rush’ to React to Jump in Oil Prices

Pierre Wunsch Photographer: Lina Selg/Bloomberg Photo by Lina Selg /BloombergArticle content(Bloomberg) — European Central Bank Governing Council member Pierre Wunsch said he’s inclined for now to look past the jump in energy prices caused by the fighting in the Middle East.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentShould policymakers face an “oil shock,” however, they’d have to assess the situation and decide what action to take, the Belgian central-bank chief told reporters Monday in Brussels. Despite the likelihood that higher oil prices would also weigh on the economy, such an outcome would probably be inflationary on a net basis, he said in Brussels. Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle content“We don’t know much so I would certainly not rush to react to any movements to energy prices,” Wunsch said. “If it lasts longer, if the increase in energy prices is higher, then we will have to run our models and see what happens.”Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentThe escalating war in the Middle East has led to a surge in oil prices and fanned inflation concerns. Traders on Monday pared bets on additional reductions in borrowing costs by the ECB this year. Point72 economist Soeren Radde even said officials could now lean toward a hike.Article contentWhile central banks including the ECB tend to “look through” oneoff effects, they’re wary of risks to consumer expectations — particularly after the 2022 price shock proved to be more persistent than initially expected.

President Christine Lagarde said last week that policymakers must keep an eye on still-elevated perceptions of inflation.Article contentThe ECB forecasts a slight undershoot in price gains this year and next, with a return to 2% in 2028. While that’s left most officials comfortable with current monetary-policy settings, they stress “full optionality” on the next moves in light of the uncertainty.Article content“You want to ‘look through’ and see what developments will be,” Wunsch said. “But we will need to be open for other developments, depending what we see.”Article contentWunsch’s Irish counterpart, Gabriel Makhlouf, said it’s “far, far too early to come to conclusions,” though the situation will be part of discussions when officials next meet.Article content“Businesses are not sure about their investment decisions — whether to delay them or not,” he told Irish radio, referring generally to geopolitical events over the past year. “So we are paying very close attention.”Article contentTrending Garry Marr: Bad news, Gen Z — The Freedom 55 guy is still working in his 60s and you will be, too Retirement Saudis pulled deeper into Middle East war after refinery attack Energy Subscriber only. Canadian software giants are getting clobbered by the AI scare trade. Should you buy or bolt? Subscriber only Innovation The (high) opportunity cost of paying off your mortgage early Mortgages Insight from the desert about the ‘four-burner theory’ of building wealth with purpose Investor Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Garry Marr: Bad news, Gen Z — The Freedom 55 guy is still working in his 60s and you will be, too Retirement Saudis pulled deeper into Middle East war after refinery attack Energy Subscriber only. Canadian software giants are getting clobbered by the AI scare trade. Should you buy or bolt? Subscriber only Innovation The (high) opportunity cost of paying off your mortgage early Mortgages Insight from the desert about the ‘four-burner theory’ of building wealth with purpose Investor