Bank of Italy Governor Fabio Panetta said Tuesday that the effects of the Iran war are set to linger on even if the conflict ends soon.
"Exports through the Strait of Hormuz have almost come to a halt and there is evidence of significant damage to energy production and refining infrastructure," Panetta said as he presented the central bank's accounts for 2025.
"Even in the event of a rapid ceasefire, a return to orderly conditions in the energy market would take some time" The governor said the conflict in the Middle East has "abruptly changed the outlook" for growth and inflation for Italy and the eurozone as a whole.
"Financial markets have reacted with higher yields and risk premia, falling equity prices and a weaker euro," he said.
"Short-term inflation and policy rate expectations have been revised upwards.
