Markets may be failing to fully price in risks from geopolitics and the economic outlook — and the European Central Bank is monitoring this as a potential threat to financial stability, the group's vice-president said Wednesday.
He added, "This is one of the main elements that we believe now could produce volatility in the financial landscape."
He was discussing the release of the central bank's Financial Stability Review for November, which tackles the challenges of a "soft landing" that brings down inflation without significant economic damage.
However, it says risks to financial stability remain "elevated," as attention is now on the knock-on effects of tight financial and credit conditions on borrowers, and a correction in real estate markets.
Nevertheless, because of base effects we will have some increase in inflation over the next months," de Guindos said.
Persons:
Luis de Guindos, CNBC's Annette Weisbach, de Guindos
Organizations:
European Central Bank, ECB