ECB Committee Ryan: Iran's “consumer war” could lead to high inflation

On 1 September, according to the British Financial Times, a senior ECB policymakers warned before the market expected the central bank to raise interest rates next week that the bank must be prepared for a possible continued “depletion war” in the Middle East, a conflict that could lead to high inflation in the eurozone. The statement by the ECB’s Managing Board, Rene, is expected to strengthen the market’s expectation that the ECB will increase interest rates by 25 basis points next week. Rene said, “In the face of these inflationary pressures, we must not be petty.” He means energy prices pushed up by the conflict and the near closure of the Strait of Hormuz. He said, “We cannot afford any burden crisis in Europe.” Rene’s rhetoric marked a shift in the hawk’s stance, which until recently focused more on the risks of economic growth than on inflation, suggesting that support for tightening policies within the ECB’s Governing Board has expanded. Kim Xian