(Bloomberg) -- European Central Bank Governing Council member Joachim Nagel said forces including geopolitics and decarbonization could keep consumer-price growth elevated in the years ahead.

“A range of potential factors could lead to higher inflationary pressure in the future,” the Bundesbank president told a conference Tuesday, also citing demographic trends that may lead to “persistently higher wage growth.”

While saying more research is needed, Nagel doesn’t expect a return to the kind of weak inflation rates seen before the pandemic.

Having averaged just half the ECB’s 2% goal between 2013 and 2019, euro-zone inflation shot up in 2021 and hit a record 10.6% the following year. While it’s now back at 2.4%, opinions differ as to whether over- or undershooting is the bigger risk in the future.

“Looking ahead, do we need to prepare for a return to the world of too low inflation we were used to in the last decade? I am not convinced,” Nagel said.

The interplay of structural drivers may lead to “some sort of sweet spot for monetary policy – with inflation at about 2% and the level of interest rates not too high but at a safe distance from the effective lower bound,” he said.

Nagel warned, though, that action would be needed should upward price pressures resurface in the medium-term.

“Even a temporary accommodation of higher inflation rates bears a risk of inflation expectations becoming de-anchored,” he said. “We should not allow this risk to materialize.” 

The ECB is considering how much it should lower borrowing costs after a probable first cut next month. The retreat in price growth is testament to the historic bout of hikes deployed to tame inflation in recent years, Nagel said.

“Since late 2022, the wave of inflation has been receding,” he said. “This is evidence of the success of the Eurosystem’s tight monetary policy.”

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