BERLIN, June 15 (Xinhua) -- Germany's central bank chief cautioned on Monday that inflationary pressures could persist for months despite an agreement between Iran and the United States to end the conflict in the Middle East, warning that oil markets would take time to stabilize.
Bundesbank President Joachim Nagel said a ceasefire and the reopening of the Strait of Hormuz appeared likely, but warned that disruptions to oil supplies would persist even if shipping routes were restored.
"Some production facilities in the region have been damaged or taken out of service, and reserves are dwindling," Nagel told the Euro Finance Summit in Frankfurt.
Nagel said it would take months for oil supplies to return to normal levels, adding that price pressures could intensify further as government measures aimed at lowering energy costs are phased out.
The Iran war which began on Feb. 28 has driven up oil prices, increasing inflationary pressures across the euro zone and weighing on economic growth.
The Bundesbank last week cut its forecast for German economic growth this year to 0.5 percent from 0.6 percent projected last December.
The European Central Bank (ECB) raised interest rates last week for the first time in nearly three years, citing concerns that higher energy prices could keep inflation elevated.
Nagel, a member of the ECB's Governing Council, said he would not be surprised to see further rate increases later this year.
"Persistently high energy costs are likely to be increasingly reflected in consumer prices in the coming months," he said.
"We are determined to adjust monetary policy in such a way that inflation stabilizes at our 2 percent target over the medium term. In doing so, we are keeping all options open." ■
