LONDON, June 17 - Olaf Sleijpen, a Dutch member of the European Central Bank's policymaking community, told an audience in London that while a rerun of the inflation surge seen in 2022 appears less likely at present, it remains a possibility that cannot be dismissed.
Speaking at an event organised by the European Economics and Financial Centre (EEFC), Sleijpen said the dominant preoccupation for monetary policy continues to be the prospect of secondary, or so-called second-round, effects. "For monetary policy, the key issue is again the risk of second-round effects," he said.
He also pointed to developments in global energy markets this week as a factor that has eased some near-term inflation pressures. According to Sleijpen, a framework peace deal reached between the United States and Iran - after nearly four months of war in the Middle East - has contributed to declines in both spot market oil prices and market expectations for future oil levels. "A repeat of 2022 appears less likely, but it cannot be excluded," he added.
The remarks combined two strands of concern for policymakers: lingering inflationary vulnerability through feedback channels in the economy, and a recent softening in oil market signals tied to geopolitical developments. Sleijpen framed second-round effects as the central monetary challenge, while noting the calming impact that lower oil prices and reduced forward price expectations can have on inflation dynamics.
The event in London organised by the EEFC served as the venue for these remarks, which juxtaposed the persistent vigilance of central bankers about inflation dynamics with an acknowledgment of recent market moves in energy. Sleijpen’s statements underline a cautious stance - recognizing an improvement in the near-term outlook for energy-driven inflation but keeping open the possibility that inflationary pressures could re-emerge through broader economic channels.
His concise assessment emphasized that while current indicators point away from a full repeat of 2022’s severe inflation episode, the risk has not been eliminated and remains a consideration for monetary policy deliberations.