Economists call to prepare for more frequent and persistent shocks in energy

Economists present at the annual forum of the European Central Bank (ECB) in Portugal appealed today to be prepared for possible shocks in the energy markets in the coming years, which may be more frequent and persistent.

“There is great uncertainty, but it would be prudent to prepare for the possibility of more persistent and frequent shocks in the energy market”, defended the governor of the Central Bank of Norway, Ida Wolden Bacheduring a panel at the forum held in Sintra.

Bump pointed out that, with a higher proportion of renewables in the energy mix and insufficient storage systems, the offer may become more “unpredictable” and called for central banks to deepen their knowledge of energy markets.

“Efforts to combat climate change may change the structure of our economies in ways that make existing models based on historical data less relevant”, warned the Norwegian governor, who considered “crucial” be able to identify the origin and nature of shocks in energy “in real time”.

Bump defended a monetary policyflexible and forward looking”, but qualified that the flexibility “cannot come at the expense of credibility”.

Volatility in the markets

On the same panel, he also warned about energy shocks Miguel Gil Tertrechief economist at the European Commission (EC), who identified two sources of volatility for the coming years: the mismatch between supply and demand related to fossil fuels and the instability of green technology due to its dependence on weather.

Even so, he pointed out that the 2022 energy crisis was not related to the green transition but to Russian natural gas and considered that there are currently “less chance” of Russia using the energy market as a weapon.

The green technologywould have protected better” of the Russian gas crisis, said Gil Tertre, who celebrated the acceleration in the implementation of these technologies, at record levels.

The Bloomberg Journalist javier blasa benchmark in this sector, said that one of the difficulties of making predictions in these markets is “predict what the weather will be in two weeks, and that is very difficult”.

“The solution will be storage, but we are not there yet“, lament.

Monetary Policy and Inflation

The forum of ECB returned to Sintra this week with stabilization in an environment of volatile inflation as the common thread, and the president of the entity, Christine Lagarde, has already warned that monetary policy will continue to be restrictive.

“It is unlikely that in the near future the central bank will be able to say with full confidence that the maximum rates have been reached”, he said this Tuesday during his introductory speech, in which he confirmed that there will be a new rise in July unless there is a “major change” in the prospects.

The Sintra meeting will celebrate its last day this Wednesday, with a panel on monetary policy that will bring together Lagarde with the president of the Federal Reserve (Fed) of the United States, Jerome Powell, and the governors of the Bank of England, Andrew Bailey, and from Japan, Kazuo Ueda.

Source: EFE