European Central Bank Governing Council member Yannis Stournaras has stated that the eurozone's growth and inflation prospects could have been more favorable than earlier forecasts, had the conflict in the Middle East not escalated again.

The Governor of the Bank of Greece, speaking at an event in Athens on Friday, noted that the pause in hostilities last month led to an unexpected drop in oil prices and contributed to a broader slowdown in inflation.

"If these conditions had persisted, growth could have been higher than previously forecast and inflation lower than previously expected," he said. "But hostilities have resumed, so we are back to square one."

Markets currently anticipate the ECB will take no further action at its meeting scheduled for July 22-23, though expectations are priced in for one or two more interest rate hikes within the year.

"This demonstrates how fragile and volatile the situation in the Middle East and energy prices are," Stournaras said. "No one knows what tomorrow will bring, as there is tremendous uncertainty surrounding the evolution of these events. Therefore, we must formulate our monetary policy by fully taking these factors into account."