ECB Executive Committee Paneta: The economic outlook is fragile and inflation and growth risks coexist

On 7 July, the ECB Executive Committee, Paneta, stated that the ECB was coping with an uncertain economic situation even as the US and Iran were approaching a lasting peace agreement. Paneta stated at a meeting in Rome that, although the US-Iraq negotiations could result in energy prices below the June European Central Bank forecast, “the outlook remains fragile”. “The risk of upward inflation and downward growth continue to coexist. This requires continuous monitoring of geopolitical developments, energy markets, supply chains, wages and inflation expectations. At the same time, monetary policy is required to avoid pre-defined commitments.” Paneta also indicated that the current conflict was one of a series of increasingly frequent supply shocks that could change the way policymakers would respond in the future to ensure that inflation reached the 2 per cent target in the medium term。