LIMASSOL, Cyprus (Reuters) - The European Central Bank’s monetary policy is being effective in reining in prices, Cyprus Central Bank Governor Constantinos Herodotou said on Wednesday.
"The recent data on inflation affirms that monetary policy transmission is effective and having an impact on inflation," Herodotou, who is also a member of the Governing Council of the European Central Bank, told a conference.
"The ECB has managed to keep inflation expectations anchored, as most measures of longer-term inflation expectations currently stand at around 2%, which is the inflation target rate," Herodotou said.
However, Herodotou said "material uncertainty" continued to persist, referring to a recent spike in energy prices which could transmit to the rest of the economy again, and have a new upward pressure on prices.
"Furthermore, the elevated wages and profit margins observed in the euro area last year need to be monitored closely, even though they are currently expected to normalize," Herodotou said.
Inflation in the euro zone fell to its lowest level in two years in September.
Consumer prices in the 20 countries that share the euro rose by 4.3% in September, the slowest pace since October 2021, from 5.2% one month earlier, according to Eurostat's flash reading published on Friday.