ECB's Nagel Sees No Quick Inflation Relief Even with Hormuz Strait Reopening
Energy-Driven Inflation and ECB Policy Outlook
FRANKFURT, June 15 (Reuters) - European Central Bank policymaker Joachim Nagel said on Monday there would be no immediate relief from an energy-driven spike in inflation even if the Strait of Hormuz reopens soon because it will take months for oil supply to recover to its pre-war level.
Strait of Hormuz Reopening: Market Reactions
U.S. and Iranian officials said overnight they have reached an agreement to end their war and reopen the Strait, a gateway for energy shipment, in a preliminary pact that sent oil prices falling.
ECB Policy Options for Upcoming Meeting
But Nagel reaffirmed his view that all options - meaning both holding interest rates steady or increasing them - remain for the central bank's next policy meeting on July 22 to 23.
Nagel's Inflation Outlook
"No relief is in sight for the foreseeable future," Nagel said. "On the contrary: even if the Strait of Hormuz were to become navigable again soon, it will take months for the oil supply to return to normal."
Recent ECB Actions and Inflationary Pressures
The ECB raised interest rates for the first time in nearly three years last week to try to curb inflation before the surge in energy costs, which has followed unprecedented supply disruption linked to the Iran war, spreads further across the euro zone economy.
Impact of Government Measures on Inflation
Nagel said another increase in inflation should be expected when government measures to limit energy price rises expire. These measures, which include a fuel price discount at the pump in Germany, dampened the inflation rate in the euro zone by 0.4 percentage points in May, Nagel said.
Reporting Credits
(Reporting by Francesco Canepa; editing by Barbara Lewis)
