ECB Governing Council member Pablo Hernandez de Cos has emphasized that the central bank’s future monetary policy decisions will be highly dependent on the development of various risk sources, including recent financial market turmoil.
De Cos also noted that the intensity of monetary policy transmission will be taken into account in policy decisions. He observed that the ongoing tensions in financial markets have led to a further tightening of financial conditions, impacting the outlook for economic activity and inflation.
As the ECB prepares for its next meetings, De Cos highlighted that all these factors must be considered.
Reagrading inflation, he wared, “over the medium term, the main risk for inflation comes from a persistent rise in price expectations above our inflation target.”
Howveer, “the disinflation process could be accelerated further if the high tensions in financial markets were to be prolonged,”he added.
