ECB Vice President Luis de Guindos acknowledged in a speech that inflation is moving “on the right track” towards target. But he also pointed out several factors that could derail progress.
De Guindos highlighted “wage pressures” as a crucial factor yet to show signs of easing, alongside the potential for “profit margins” to remain robust. Furthermore, he pointed to “heightened geopolitical tensions,” especially in the Middle East, as a risk that could lead to increased energy prices and disrupt global trade, complicating the inflation outlook.
“While we are heading in the right direction, we must not get ahead of ourselves,” he said, indicating that it would take “some more time” to gather necessary data to confirm that inflation is on a stable path towards 2% target.
The coming months are expected to provide crucial insights into underlying inflation drivers, with forthcoming data on wage settlements and firms’ pricing behaviors, along with new economic projections in March, set to inform ECB’s future policy decisions.
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