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Inflation hit 5% last month, the highest on record for the
19-country currency bloc, but the ECB expects it back under its
2% target in both 2023 and 2024, even without policy tightening,
as one-off pressure ease.
"Inflation is not going to be as transitory as forecast only
some months ago," de Guindos told a UBS event. "The assessment
of risk for inflation is moderately tilted to the upside over
the next 12 months."
He added that energy costs are likely to remain elevated while
supply-side bottlenecks continue to exert upward pressure on
prices.
Still, over the longer term, risks are still seen balanced, de
Guindos said, adding that 2023 and 2024 inflation are both seen
just below the ECB's 2% target.
Some policymakers are more sceptical, however, and warned that
inflation could stay above target even further out as wage
policy is likely to adjust to higher price growth, making the
surge more durable.
Although energy prices increased in recent weeks, de Guindos
said this did not fundamentally alter the inflation picture.
"They do not affect much the projections we produced 3 weeks
ago," he said.
The Omicron variant of COVID-19 is also unlikely to
significantly change the growth outlook, for now, he said,
adding that European economies have adapted to living under the
pandemic.
(Reporting by Balazs Koranyi and Francesco CanepaEditing by
Peter Graff, Alexandra Hudson)
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