Bank of Spain governor pointed to extreme uncertainty regarding inflation prospects in Europe

According to Jose Luis Escriva, a member of the European Central Bank (ECB) Governing Council and Bank of Spain governor, at this point it is extremely difficult to determine which exact inflation risks prevail in Europe. The official stated this at a conference organized by Caixaforum in Madrid.

As Escriva believes, the risks to economic growth in the eurozone are now more tilted to the downside. However, things are more complicated in case of inflation, as uncertainty prevails on both sides. The official considers the United States trade policy to be one of the main causes of the current ambiguous situation.

In his speech, Escriva emphasized the need to remain reasonable in implementing economic changes, especially regarding the loosening of fiscal rules in Europe. He pointed to the high level of public debt of many countries in the region and the lack of room for fiscal maneuvering in some of them. The official called for caution in the process of increasing defense spending and easing fiscal restraints.