MADRID (Reuters) -Inflation in the euro zone is expected to decline further over the remainder of 2023 but would stay above the European Central Bank's 2% target for an extended period of time, Spain's deputy central bank governor Margarita Delgado said on Friday.
"Inflation continues to decline but is still expected to remain too high for too long," Delgado, who also sits on the European Central Bank's supervisory board, told a financial event in Pamplona according to a speech posted on the Bank of Spain web page.
Delgado, who is among the main contenders to become the ECB's new supervisory chief, did not say if rates were likely to rise further at the next ECB meeting in mid-September, although the wording from its meeting in July was "slightly modified so as not to rule out a possible pause" in September.
She added that the past rate increases continued to be transmitted forcefully and that financing conditions have tightened and were dampening demand, "which is an important factor in bringing inflation back to target" for the ECB, which will stick to a data-dependent approach on rate decisions.
As global central bankers gather in Jackson Hole, Wyoming, talk is shifting to keeping rates around where they are now but for longer than perhaps previously estimated.
The ECB has lifted rates from deep in negative territory to two-decade-highs in just a year to combat a historic surge in inflation and policymakers are now contemplating whether they have done enough to put price growth back on a path to 2%.
Consumer prices in the euro zone increased by 5.3% in July after 5.5% in June, extending a downtrend that started last autumn.
This week J.P.Morgan also said it now expects the ECB to pause its tightening cycle next month after euro zone business activity contracted much more than expected. It expects a final 25 basis point hike to now come in October, instead of September.