Ella 
Constantinos Herodotou, an ECB policymaker and the Governor of Cyprus’s central bank, emphasized on Friday that the European Central Bank’s (ECB) monetary policy measures have been effective in containing inflation, although significant uncertainty persists within the euro area.
Speaking at a conference in Limassol, Herodotou acknowledged that the recent surge in energy prices has the potential to transmit inflationary pressures to other sectors of the economy. This development could exert upward pressure on overall prices.
Herodotou also underscored the importance of monitoring liquidity conditions within the euro area banking system, as these conditions play a pivotal role in the transmission of monetary policy and, consequently, have implications for inflation dynamics.
The ECB has responded to inflation concerns by raising its deposit rate to a record high of 4%. However, it has indicated a cautious stance in the coming months, given tentative indications that inflationary pressures are subsiding. Headline inflation in the 20 eurozone countries declined to 4.3% in September, marking its lowest level since October 2021, down from 5.2% in the previous month.
Furthermore, Herodotou highlighted the need for close monitoring of elevated wages and profit margins, as well as instances of profiteering observed in the euro area in the past year and a portion of 2023. While these factors require vigilant scrutiny, they are anticipated to normalize over time.
In light of these ongoing uncertainties, Herodotou affirmed his belief in the ECB Governing Council’s data-dependent approach to interest rate decisions, stating that it is the right course of action. This approach allows the ECB to make decisions based on evolving economic data and conditions.
