DUBLIN, June 16 (Reuters) – An interim deal to end the Middle East conflict will not necessarily bring an immediate end to the global \u200benergy shock, with damage to energy infrastructure potentially causing lingering \u200cprice pressures, European Central Bank Governing Council member Gabriel Makhlouf said on Tuesday.<\/p>\n
The ECB raised interest rates<\/a> for the first time in nearly three years last week \u200band left the door open to more tightening to \u200bprevent a surge in fuel costs caused by the Iran war<\/a> \u2060from spreading to other prices.<\/p>\n Sign up here.<\/a><\/p>\n While the preliminary agreement<\/a> struck by the \u200bU.S. and Iran three days after the ECB’s decision was “welcome”, much remains \u200bunclear, Makhlouf said.”Let me be clear: an end to the conflict does not necessarily mean an immediate end to the shock,” Makhlouf, Ireland’s recently re-appointed<\/a> central bank \u200bchief, said in a speech.<\/p>\n “It remains to be seen how quickly \u200bsupply chains normalise and energy prices adjust. The direct price pressures might not \u200cfade \u2060so quickly if the infrastructure damage from the war means production only recovers with a lag.”<\/p>\n Makhlouf added that there also remained little clarity on the proposed reopening of the Strait of Hormuz, which Iran \u200bhas effectively blocked \u200bsince the U.S. \u2060and Israel attacked Iran in February.<\/p>\n The ECB’s Chief Economist Philip Lane said in an interview<\/a> at the \u200bReuters NEXT Europe conference on Tuesday that the bank \u200bwould continue \u2060to be “proactive” in its fight against high inflation even after the deal brought down energy prices.<\/p>\n Investors are betting on at least one more \u2060ECB \u200brate hike this year, most likely in \u200bSeptember or October, with the slight risk of a further move in winter. The \u200bdeposit rate is currently at 2.25%.<\/p>\n Reporting by Padraic Halpin Our Standards: The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n
\nEditing by Gareth Jones<\/p>\n