O The governor of the Bank of Portugal (BoP), Mário Centeno, admitted this Monday a scenario of stagflation in the euro zone – a situation in which an economy does not grow, unemployment increases and prices rise -, following the Russian attack on Ukraine.
“I am convinced that the growth momentum that the economy was following will prevail,” Centeno said in an interview with Bloombergadding that “a near-stagflation scenario is not outside the possibilities we may face”.
Centeno therefore believes that it is necessary to “adjust” policies to this possibility.
The term stagflation describes the period experienced in the 1970s and early 1980s. (marked by rising oil prices) where inflation was high (in some countries it exceeded 10%), low economic growth rates and high unemployment rates. More recently, this fear has been expressed due to problems in product supply chains and rising energy prices.
The European Central Bank (ECB) said last week that monitors the situation in Ukraine and will take it into account when reviewing its monetary policy at the next meeting on March 10.
A spokesperson told EFE that “the ECB is closely monitoring the implications of the situation in Ukraine”. “At the March meeting, it will carry out a comprehensive analysis of the economic outlook. This includes recent developments in the geopolitical field,” according to the ECB spokesperson.