Olli Rehn, Bank of Finland governor and European Central Bank Governing Council member, said the energy-price shock triggered by the Middle East conflict has not spread to the broader economy. Wage growth remains moderate and the feared wage-price spiral has not materialized. However, eurozone inflation jumped from 2.9% in July to 3.3% in August, while oil is trading above $90 per barrel, up approximately 25% since the conflict began. The near-complete blockage of the Strait of Hormuz, which handles about 20% of global oil and liquefied natural gas exports, explains this pressure on energy prices. Market participants are pricing in a potential rate hike to 2.5% at the ECB meeting on September 10.
Source: Read the original article
