GBAF Logo
ECB's Makhlouf concerned energy prices may stay higher for longer
Finance

ECB's Makhlouf concerned energy prices may stay higher for longer

Published by Global Banking & Finance Review

Posted on May 1, 2026

1 min read

· Last updated: May 1, 2026

Add as preferred source on Google
Finance Banking Markets

ECB's Makhlouf Warns Prolonged High Energy Prices Could Fuel Inflation

Concerns Over Energy Prices and Inflationary Effects

Makhlouf's Warning on Persistent High Energy Costs

DUBLIN, May 1 (Reuters) - European Central Bank Governing Council member Gabriel Makhlouf said he is concerned that energy prices may stay higher for longer without a clear timeline for the end of Middle East conflict and will be watching closely for knock on effects.

Monitoring Indirect Effects on Inflation

"I will be paying close attention to indirect effects, that is how higher energy prices are contributing to cost-push inflation in production, transportation, and services," Makhlouf said on his blog on the Irish central bank's website on Friday, a day after the ECB left interest rates but debated hiking them.

Wage Impacts and Inflation Expectations

"Potential second-round effects via wages will take longer to show up, given the staggered nature of wage-setting in Europe. In the meantime, inflation expectations need to be closely monitored for signs of de-anchoring."

Reporting Credits

(Reporting by Padraic Halpin; editing by William James)

Key Takeaways

  • Energy price volatility tied to the Middle East conflict may sustain upward inflation pressures via production, transport and services sectors, with wage‑related second‑round effects lagging. (lemonde.fr)
  • ECB March staff projections show energy inflation is expected to peak in Q2 2026 and decline afterwards—but adverse scenarios with prolonged energy shocks could push inflation and growth impact significantly higher and more persistent. (ecb.europa.eu)
  • Markets are now pricing in a “higher‑for‑longer” interest‑rate outlook, as energy price rebound reverses earlier inflation easing, complicating ECB policy path. (ecmarkets.com)

References

Frequently Asked Questions

Why is ECB's Gabriel Makhlouf concerned about energy prices?
Makhlouf is concerned that energy prices may stay elevated longer than expected due to ongoing Middle East conflict, potentially affecting inflation.
How can higher energy prices impact European inflation?
Higher energy prices can cause cost-push inflation in production, transportation, and services, and may have delayed second-round effects through wages.
What is the ECB's current stance on interest rates?
The ECB has left interest rates unchanged for now, though there was debate among members about possibly raising them.
What are second-round effects of higher energy prices?
Second-round effects refer to delayed impacts, such as wage increases, which could further fuel inflation over time.
Why must inflation expectations be closely monitored?
Monitoring inflation expectations is vital to detect any signs of de-anchoring, which could indicate loss of confidence in stable inflation targets.

Tags

Related Articles

Image for Insurance broker Aon profit jumps on risk management strength

Insurance broker Aon profit jumps on risk management strength

Image for Ukrainian drones spark new blaze at Russian port of Tuapse

Ukrainian drones spark new blaze at Russian port of Tuapse

Image for Financial firms last month did not expect BoE to raise rates, BoE survey shows

Financial firms last month did not expect BoE to raise rates, BoE survey shows

Image for Lazard's profit surges as asset management business shines

Lazard's profit surges as asset management business shines

Image for Tesla sales rebound continues in several European markets in April

Tesla sales rebound continues in several European markets in April

Image for Sterling steady at 10-week high in quiet end to busy week

Sterling steady at 10-week high in quiet end to busy week

More from Finance

Explore more articles in the Finance category

Image for Denmark's FLSmidth investigates potential breach of sanctions on Russia
Denmark's FLSmidth investigates potential breach of sanctions on Russia
Image for Analysis-While Asia and Europe scramble for natural gas, the US glut has nowhere to go
Analysis-While Asia and Europe scramble for natural gas, the US glut has nowhere to go
Image for Roblox shares plunge as forecast cut signals safety measures weighing on user growth
Roblox shares plunge as forecast cut signals safety measures weighing on user growth
Image for Trump's attacks on Europe's leaders worsen transatlantic frost
Trump's attacks on Europe's leaders worsen transatlantic frost
Image for Gaza aid flotilla activists taken to Crete after Israeli interception
Gaza aid flotilla activists taken to Crete after Israeli interception
Image for UAE says Iran cannot be trusted over Hormuz, peace efforts at an impasse
UAE says Iran cannot be trusted over Hormuz, peace efforts at an impasse
Image for Linde reports first-quarter adjusted EPS beat
Linde reports first-quarter adjusted EPS beat
Image for UK mortgage approvals rise to 4-month high, BoE data shows
UK mortgage approvals rise to 4-month high, BoE data shows
Image for Oscar statuette for 'Mr. Nobody Against Putin' goes missing on flight
Oscar statuette for 'Mr. Nobody Against Putin' goes missing on flight
Image for Yen jumps sharply as Japan warns it is ready to intervene again
Yen jumps sharply as Japan warns it is ready to intervene again
Image for UK factories, hit by Iran war, brace for higher costs and more delivery delays
UK factories, hit by Iran war, brace for higher costs and more delivery delays
Image for Exclusive-Syria relies on Russia's oil despite pivot to the West
Exclusive-Syria relies on Russia's oil despite pivot to the West
View All Finance Posts