LONDON (Reuters) – Growth could suffer and inflation could rise if the current jump in oil prices proves to be more than a temporary spike, ECB policymaker Francois Villeroy de Galhau said on Tuesday.
Villeroy told a conference in London that oil prices were adding new economic uncertainty on top of those sparked by trade tensions from the United States, and Britain’s planned departure from the European Union.
“It is too early to rush to hasty conclusions; we should closely monitor the consequences on the oil market, which is characterised by a rather flexible supply and a subdued demand,” Villeroy said.
“If it lasts, this latest oil shock could increase inflation and hamper growth,” Villeroy, who is also the governor of the French central bank, told the World Conference of Banking Institutes.
Villeroy also said that while Brexit was bad news, EU banking supervisors were prepared in case Britain left the bloc without a deal in place.
(Reporting by Marc Jones; Writing by Leigh Thomas; Editing by Sudip Kar-Gupta)