Bank of England policymaker Megan Greene expressed concern on Wednesday that the ongoing unrest in the Middle East could potentially impact the inflation forecast by influencing inflation expectations, according to Reuters.
“Across the developed world, bringing inflation back to target has been a bumpy ride; it was always going to be, and the last mile is the hardest,” Greene stated during a seminar organised by the Institute of International Finance, held concurrently with the IMF meetings.
She noted that recent inflation trends have been promising, with inflation rates inching closer to the targets set by central banks.
However, Greene warned that the escalating conflicts in the Middle East could introduce a new risk to the inflation forecast by shaping public expectations of future price fluctuations.
Greene added that the current situation in the Middle East indeed presents a risk, expressing her concern about potential energy price shocks and other supply-side disruptions, which could follow the numerous supply-side shocks witnessed over the past few years and their potential effect on inflation expectations.
