European Central Bank Governing Council member Dimitar Radev said on Friday that the central bank should not wait too long to address the economic repercussions resulting from the war with Iran.
Speaking in Reykjavik, the head of the Bulgarian central bank said the cost of acting too late may exceed the cost of acting too early. He pointed out that the trade-off at this stage is not symmetrical when there is a risk that inflation expectations will become less stable.
Policymakers appear to be closing in on their first interest rate hike since 2023 after conflict in the Middle East pushed inflation beyond the 2% target. Some officials said the ECB should wait to observe spillover effects before intervening, while others expressed concern about risks to economic growth.
Radev called on governments to support the European Central Bank in addressing the crisis through spending measures and economic reforms. Monetary policy cannot be the only line of defence, he said, adding that fiscal policy, investment, energy efficiency and structural reforms are all important for economic resilience amid recurring supply shocks.
Source: Investing.com
