(Bloomberg) -- European Central Bank Governing Council member Robert Holzmann said the Israel-Hamas war risks stoking oil prices and in turn driving inflation and weighing on growth, according to Ta Nea newspaper. 

• “What has changed since our last board is the perception of risk: following the latest developments in the Middle East, the risk of higher oil prices and consequently higher inflation and lower growth has clearly increased,” Holzmann, who head’s Austria’s central bank, was cited as saying
• Fellow ECB official Gabriel Makhlouf said “the outlook is highly uncertain as it is constantly changing as a result of conflict, geopolitical fragmentation and extreme weather related to climate change”
  • “This context is unlikely to change anytime soon and as policymakers, the only thing we can be sure of is uncertainty itself”
  • Makhlouf is the chief of the Irish central bank
• Pierre Wunsch of Belgium said that “the movements in international oil markets seen so far have mean rather limited revisions”
  • “Things could of course change if the conflict in Israel and Gaza escalates in the wider region and causes wider geopolitical instability and more price increases in global commodity markets”
  • “This leads me to conclude that there are no fundamental reasons to doubt the baseline scenario predicted in the September forecasts, but it is surrounded by an unwanted uncertainty”
• Yannis Stournaras of Greece said that “the European Union is currently facing a new source of uncertainty, this time from the Middle East, which can cause tremors, depending on the extent and intensity of the developments”
  • “This means that it should be prepared for the worst, because these crises have been shown to be associated with conditions of stagflation and with other consequences, such as immigration, in addition to the humanitarian crisis”
  • “At the monetary policy front, I think interest rates are already above the neutral rate level”
  • “I believe that we shouldn’t tighten monetary policy further”
• Mario Centeno of Portugal said that “the balance of risks is clearly tipping downwards”
  • “In today’s economic context we cannot risk excessive tightening that damages economic activity more than necessary”
• Madis Muller of Estonia said that “we must remain vigilant and pay attention to the signs or pressures re-emerging in prices, such as the recent rise in energy prices due to geopolitical developments”
• Constantinos Herodotou of Cyprus: “Unfortunately, the recent developments in Israel, in addition to their sad human dimension, also increase economic risks, for example in relation to energy prices which — if there is a prolonged crisis — may have negative effects on inflation and economic activity”
• Note: The ECB’s Oct. 26 rate decision will be held in Athens
• Read more: ECB Is Watching Oil for Inflation Risks, Lagarde Tells Ministers

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