Euro zone inflation is not extending across the economy at the same pace observed in 2022, but authorities remain vigilant, Portuguese central bank chief Álvaro Santos Pereira said at a public event in London.
Pereira, who sits on the European Central Bank's Governing Council, addressed attendees at a European Economics and Financial Centre gathering held at the Portuguese embassy. He qualified the current picture of inflation, saying that although broadening is not occurring as quickly as during the previous surge, the risk has not vanished.
"It doesn’t mean that it could not happen... It’s important for us to notice, and we monitor very closely exactly this in the next few months to see whether this is broadening," Pereira said.
The remarks come after the ECB raised policy rates last week - marking the second increase this year. Financial markets are currently pricing in at least three more rate hikes over the next 12 months, reflecting expectations that tightening may continue.
Pereira singled out the recent spike in natural gas prices as a development that warrants particular attention from policymakers. He also highlighted the rapid expansion of artificial intelligence and the consequent implications for global growth and inflation as additional challenges for central bankers.
"There’s a lot of risks that certainly have risen in the last few months," he added, indicating a range of uncertainties now on the radar of the ECB's decision-makers.
His comments underscore an approach of careful monitoring: inflation appears less prone to broad and rapid diffusion than in 2022, but elevated energy costs and structural changes tied to new technologies could alter that trajectory. For now, the ECB has chosen a tightening path, and markets are pricing further action in the year ahead.
Contextual note: The observations summarized here reflect statements made by Álvaro Santos Pereira at the referenced event. No additional developments beyond those comments are included.