European Central Bank Vice President Vujcic warns that energy prices may remain high for a long time and push up inflation

The Vice President of the European Central Bank, Boris Vujcic, pointed out that the ongoing escalation of the Middle East conflict will cause energy prices to remain high over a longer period and may further transmit into broader areas of inflation. He made these remarks on Friday while attending a meeting co-hosted by the European Central Bank and the Federal Reserve Bank of Cleveland in Cleveland, stating that the current core risk is precisely “energy prices remaining high for a prolonged period.” He added that the market shares the same judgment: “This is exactly the reason for such pricing adjustments appearing on the yield curve.”Vujcic also specifically mentioned concerns about insufficient refining capacity. He said: “It is now very clear that, for the foreseeable future, it will be difficult to see refining capacity return to levels seen before the outbreak of this conflict,” and “this is why energy prices, especially diesel prices, are very likely to remain high for a long time and further transmit into inflation, since diesel is, after all, widely used in the production and transportation of many products.”These comments were published just as eurozone September inflation data is about to be released. Economists predict that the eurozone inflation rate will rise sharply to 3.7%, reaching the highest level in three years, which will also provide support for further interest rate hikes ahead.